WESTPORT, Connecticut (AP) — Machinery products manufacturer Terex Corp. raised its offer for Demag Cranes AG on Thursday by more than 9 percent to $1.38 billion, and the German company indicated it expects to be able to recommend that its shareholders accept it.
Terex's German unit is now offering euro45.50 ($65.20) per share for Demag, an increase from an earlier offer of euro41.75 ($59.82) per share.
Terex Industrial Holding said in early May that it planned to make an unsolicited offer for Demag Cranes, and made the offer of euro41.75 per share, or $1.26 billion, on May 20.
Demag is based in Duesseldorf, and it makes industrial cranes and crane components, harbor cranes and terminal automation technology. Terex said it expects Demag's board will recommend that company shareholders approve the offer. At least 51 percent of Demag shares must be voted in favor of the deal for the sale to go through.
Demag said in a separate statement the deal will permit it to retain its independence as part of Terex, and said Terex is committed to the company's strategy. Demag said it will become an independent segment of Terex after the deal, and it will continue to have board and strategic autonomy. It added that Terex will back Demag's current strategy, which includes plans to develop its mid-market business, continued expansion in emerging markets, and the pursuit of partnerships.
Terex will also not require Demag to lay off workers in the next three years and will uphold its labor agreements, Demag said. The company will continue to be based in Duesseldorf.
Demag said it expects to make a complete evaluation of the revised offer and conditions. Pending the results of that review, Demag said its management board is confident it will be able to recommend that its shareholders accept the latest offer.
The new bid is 41.4 percent higher than Demag's closing price on May 20. Terex said it is a premium of 53 percent to the stock's price in early October, before the shares started to appreciate on rumors that Demag might be sold.
Terex's current bid for Demag shares is scheduled to expire on June 30.
Shares of Terex rose 92 cents, or 3.6 percent, to $26.41 in morning trading.