Finnish-based Cargotec and Konecranes have cancelled plans for a proposed merger after UK competition regulators blocked the transaction over concerns that it would harm competition in the market for container handling equipment.
The UK Competition & Markets Authority (CMA) announced on Tuesday findings from its investigation into the proposed $5 billion deal and its decision to block the merger.
“Container handling equipment is key to the smooth running of UK ports, and events in recent years have shown us how quickly problems in the supply chain can cause problems for UK consumers and businesses,” said Martin Coleman, chair of the CMA group investigating the merger. “The solutions put forward by Cargotec and Konecranes failed to effectively address our concerns, which is why we were left with no choice but to block this merger in order to ensure that UK consumers and businesses are not worse off as a result of the deal.”
CMA’s decision to block the merger and additional approvals required from relevant competition authorities ultimately led Cargotec and Konecranes to abandon the deal, Cargotec said in a statement.
The U.S. Department of Justice said its Antitrust Division had notified the companies on Monday that the proposed combination would eliminate competition and threatened a lawsuit. The DOJ said the combination would eliminate competition specifically in four types of shipping container handling equipment (straddle carriers, rubber-tired gantry cranes, automated stacking cranes, and rail-mounted gantry cranes) used by ports in the global supply chain.
“Cargotec’s and Konecranes’ proposed merger threatened to harm competition in the sale of container handling equipment to U.S. port customers and terminal operators that move consumer products, medicines, and other important goods through the global supply chain,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The combination of Cargotec and Konecranes would have been the culmination of decades of consolidation — and the companies proposed to accomplish it by extracting and retaining the strongest parts of both businesses and selling off the least desirable assets to placate the department.”
“The Board of Cargotec is convinced that the merger would have created substantial value for the entire industry as well as shareholders by improving sustainable material flow,” said Ilkka Herlin, the Chairman of Cargotec. “The combination would have created a strong European company enabling accelerated shared abilities to innovate without harming competition. We have done all we could to realise the merger and are disappointed that our plans have had to be abandoned.”
“The combination of Konecranes and Cargotec… would have created a company that would have been greater than the sum of its parts,” said Christoph Vitzthum, the Chairman of Konecranes. “The merger control process has been extensive and the investigations thorough, and Konecranes Board of Directors is disappointed that the remedy package offered did not satisfy the concerns of all regulators.”
Sign up for our newsletter