HELSINKI, April 29 (Reuters) - Finnish lift maker Kone said on Wednesday it had agreed to buy its German rival TK Elevator in a cash and stock transaction valued at 29.4 billion euros ($34.4 billion), which would create the world's largest lift maker.
The deal with private equity firms Advent International and Cinven marks one of Europe's biggest takeovers this year and is also the highest valued company takeover in Finnish history.
Kone will pay 5 billion euros in cash upon closing and issue a further
270 million new shares worth around 15.2 billion euros, corresponding to 33.8% of all issued shares and 18.3% of total votes.
In addition, Kone will take on TK Elevator's interest-bearing net debt, amounting to about 9.2 billion euros, which it plans to refinance.
The combination would result in planned cost savings estimated at 700 million euros on an annual run-rate basis, Kone said.
"This combination would meaningfully enhance our ability to meet customers’ growing demand for reliable and sustainable solutions and services," Kone CEO Philippe Delorme said in a statement.
Kone shareholders owning 40.3% of all outstanding shares and approximately 74.3% of the total votes have agreed to support the transaction and vote in favour of the board's proposals, the group said.
ANTITRUST HURDLES
For the last financial year, the combined group's annual sales would be about 20.5 billion euros, 65% of it from its service and modernisation business, Kone said.
The combined adjusted operating profit (EBIT) excluding any cost synergies stood at more than 2.7 billion euros, the company added.
Analysts have said a deal of this size will likely face close scrutiny by antitrust authorities, given the global elevator and escalator market is already highly concentrated and dominated by a small number of multinational players.
If approved, the merger would make Kone the world's largest lift maker by market value, overtaking its biggest rivals, U.S.-based Otis valued at $29.7 billion and Switzerland's Schindler at $36.2 billion.
Japan's Mitsubishi Electric and Hitachi have bigger market valuations but for them elevators are only one business segment among many.
Schindler has already said it would challenge a deal between Kone and TK Elevator before antitrust authorities.
($1 = 0.8546 euros)
(Reporting by Anne Kauranen in Helsinki; Editing by Terje Solsvik and Essi Lehto)
