Kone offers $19 billion for Thyssenkrupp’s elevator business

GERMANYFinland’s Kone, one of the world’s largest elevator manufacturers, has offered about 17 billion euros ($18.9 billion) for Thyssenkrupp’s elevator unit, making it the the highest bid so far.

Kone, which has long championed the advantages of a tie-up between the world’s third- and fourth-largest elevator groups, said it had made a non-binding bid, a day after a deadline expired.

The group said it saw a “highly complementary geographical footprint of the businesses, substantial value creation on offer from synergies, and joint innovation potential in an operating environment increasingly shaped by digitalization”.

Kone however, cautioned in its statement that its proposal was based on certain assumptions and that the terms of a potential binding offer could be subject to change.

Kone Chief Executive Henrik Ehrnrooth had said earlier that he was very interested in the elevators unit and saw significant “scale advantages”.

Ehrnrooth who was speaking after his company reported quarterly profit that beat expectations said he believed Kone would not be interested in just a minority stake.

Reuters reported that Kone’s offer represented a premium of about 1 billion euros over the best offer from leading competitors from the private equity world.

Kone’s bid has however drawn scepticism from Knut Giesler, the deputy supervisory board chairman of Thyssenkrupp’s elevator unit and a member of the powerful IG Metall union who said “Offer size alone is not enough,”.

 “It has to be a safe deal, a safe transaction for the remaining part of Thyssenkrupp and there have to be assurances for the employees of the elevator division,” Giesler added.

He said all options had to be kept open on the unit, including a selling it to a strategic player, a private equity firm or listing on the stock exchange.

“It’s a beautiful gamble at the moment and one where you don’t show your cards too early,” Giesler said, confirming Japan’s Hitachi also submitted a bid.

Giesler further noted that a buyer would likely be picked at the middle or the end of February.

Other suitors for the elevator business include a consortium of buyout groups Advent and Cinven and the Abu Dhabi Investment Authority, which are working with Germany’s RAG Stiftung.

Reuters also reported that there is also a bidding team consisting of Blackstone, Carlyle and the Canada Pension Plan Investment Board and a third group comprising Canada’s Brookfield and Singapore’s Temasek.

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