Shares of Finland’s Kone Oyj (HE:KNEBV) climbed by 4% on Thursday after reports emerged that the elevator maker is exploring a potential bid for rival TK Elevator, even as the German firm’s private equity owners, Advent International and Cinven, consider a possible initial public offering, Bloomberg reported on Wednesday, citing people familiar with the matter.
Helsinki-listed Kone has reportedly been consulting advisers and examining financing options for a potential offer, which could involve part or all of the former Thyssenkrupp AG unit.
Any deal would likely require a partner to navigate antitrust regulations, given overlapping operations in Europe, according to sources. Deliberations are at an early stage, and there is no certainty that Kone will proceed with a bid.
Kone previously pursued TK Elevator in 2020 alongside CVC Capital Partners Plc, intending for CVC to manage European operations. That bid was ultimately dropped, allowing Advent and Cinven to acquire TK Elevator for €17.2 billion.
The buyout firms later sold stakes to additional investors, including a unit of Saudi Arabia’s sovereign wealth fund, valuing the company at more than €23 billion including debt, Bloomberg reported.
Analysts at RBC Capital Markets maintained a neutral view on Kone’s potential move, highlighting both potential benefits and risks.
“The possible benefits of the deal, in our view, would include broader E&E industry consolidation (moving from a Big Four to a Big Three); potential cost synergies for Kone, especially from greater density in the installed base; and potential revenue synergies (e.g., Kone could increase its Americas footprint, where it is modestly underweight,” the analysts said.
However, they cautioned that a “strongly positive view on any mooted deal is premature,” citing the likelihood of a lengthy antitrust process and the possibility that a full-scale acquisition could be blocked or significantly pared back.
They added that “more “surgical” deal, whereby Kone acquired more limited parts of TKE would be more likely to pass antitrust scrutiny, but at theexpense of a smaller deal scope and lower synergies.”
Kone, founded in 1910, operates in nearly 70 countries with more than 60,000 employees. Its shares have risen roughly 17% this year, giving the company a market value of about €29.6 billion.
TK Elevator, with over 50,000 employees, reported €9.3 billion in sales for the 2023–2024 fiscal year and has pursued several smaller acquisitions in recent years, including buying Canadian elevator service company City Elevator Co. from Kone in 2021.
A Kone spokesperson said that the company’s position remains unchanged and that it has long maintained there is room for further consolidation in the industry, while declining to comment on specific strategic considerations.
Source :
https://www.investing.com/news/stock-market-news/kone-shares-climb-on-report-of-potential-bid-for-rival-tk-elevator-4244039
