CARGOTEC CORPORATION, STOCK EXCHANGE RELEASE, 3 DECEMBER 2020 AT 8:30 PM EET
NOT FOR PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA, SINGAPORE, THE UNITED STATES OR ANY OTHER JURISDICTION WHERE SUCH PUBLICATION OR DISTRIBUTION WOULD VIOLATE APPLICABLE LAWS OR RULES OR WOULD REQUIRE ADDITIONAL DOCUMENTS TO BE COMPLETED OR REGISTERED OR REQUIRE ANY MEASURE TO BE UNDERTAKEN IN ADDITION TO THE REQUIREMENTS UNDER FINNISH LAW. SEE “IMPORTANT NOTICE” BELOW.
The Finnish Financial Supervisory Authority has approved the merger prospectus concerning the combination of Cargotec Corporation and Konecranes Plc
Cargotec Corporation (“Cargotec”) and Konecranes Plc (“Konecranes”) announced on 1 October 2020 that the Boards of Directors of Cargotec and Konecranes have agreed upon the combination of the two companies by signing a combination agreement and a merger plan (the “Merger Plan”), according to which Konecranes shall be merged into Cargotec through a statutory absorption merger in accordance with the Finnish Companies Act whereby all assets and liabilities of Konecranes shall be transferred without a liquidation procedure to Cargotec (the “Merger”), and that the Boards of Cargotec and Konecranes unanimously recommend the Merger to their respective shareholders. The shareholders of Konecranes will receive new class A and class B shares in Cargotec in proportion to their shareholdings as merger consideration (the “Merger Consideration Shares”). The Boards of Directors of Cargotec and Konecranes have on 2 November 2020 proposed that the Extraordinary General Meetings of Cargotec and Konecranes both convened to be held on 18 December 2020 would resolve upon the Merger as set forth in the Merger Plan.
The Finnish Financial Supervisory Authority has today, on 3 December 2020, approved the Finnish-language merger prospectus concerning the Merger (the “Merger Prospectus”) prepared for the issuance of the Merger Consideration Shares to Konecranes’ shareholders. An English language translation of the Merger Prospectus (the “English Prospectus”) and Swedish and German language translations of the summary will be notified to the financial supervisory authorities in Sweden and Germany.
The Merger Prospectus, the English Prospectus and the Swedish and German summary translations will be available on or about 4 December 2020 online at https://sustainablematerialflow.com/, www.cargotec.com/egm and www.konecranes.com/egm2020. In addition, the Merger Prospectus and the English Prospectus will be available on or about 7 December 2020 in print at the offices of Cargotec at Porkkalankatu 5, FI-00180 Helsinki, Finland, at the offices of Konecranes at Koneenkatu 8, FI-05830 Hyvinkää, Finland and at the reception of Nasdaq Helsinki at Fabianinkatu 14, FI-00100 Helsinki, Finland.
The English Prospectus contains the following previously unpublished information in relation to the Merger (any capitalised terms not defined in the following shall have the meanings assigned to them in the English Prospectus):
Pro forma financial information
The English Prospectus includes the unaudited pro forma combined financial information (the “Pro Forma Information”) presented for illustrative purposes to give effect to the Merger of Cargotec and Konecranes to Cargotec’s financial information as if the Merger had been completed at an earlier date. The Pro Forma Information included in the English Prospectus has been attached in full as Annex 1 to this stock exchange release.
The unaudited pro forma statement of income for the nine months ended 30 September 2020 and for the year ended 31 December 2019 give effect to the Merger as if it had occurred on 1 January 2019. The unaudited pro forma balance sheet as at 30 September 2020 gives effect to the Merger as if it had occurred on that date.
The Pro Forma Information has been presented for illustrative purposes only. The Pro Forma Information addresses a hypothetical situation and is not therefore necessarily indicative of what the Future Company’s financial position or financial performance actually would have been had the Merger been completed as of the dates indicated. Further, the Pro Forma Information does not purport to project the operating results or financial position of the Future Company as of any future date. In addition, the Pro Forma Information does not reflect any cost savings, synergy benefits or future integration costs that are expected to be generated or may be incurred as a result of the Merger.
The Pro Forma Information has been compiled in accordance with the Annex 20 to the Commission Delegated Regulation (EU) 2019/980 and on a basis consistent with the accounting principles applied by Cargotec in its consolidated financial statements prepared in accordance with IFRS. The Pro Forma Information has not been compiled in accordance with Article 11 of Regulation S-X under the United States Securities Act of 1933 or the guidelines established by the American Institute of Certified Public Accountants.
The Pro Forma Information reflects adjustments to the historical financial information to give pro forma effect to events that are directly attributable to the Merger and are factually supportable. They include certain assumptions related to the fair value of the purchase consideration, the fair valuation of the net assets acquired, accounting policy alignments, financing arrangements and other events related to the Merger, that the management believes are reasonable under the circumstances. Considering the ongoing regulatory approval processes which restrict Cargotec’s access to detailed data of Konecranes and the fact that the final accounting measures of the Merger can only be done at the Effective Date, the pro forma adjustments presented are preliminary and based on information available at this time. The Pro Forma Information is subject to change, among other things, due to the final fair value of the purchase consideration being determined based on the then-current fair value of Cargotec’s class A and class B shares as at the Effective Date and the final purchase price allocation being based on the fair values of Konecranes’ assets acquired and liabilities assumed as at the Effective Date. Further, Cargotec is able to conduct a detailed review of Konecranes’ accounting policies only after the Effective Date due to restrictions on information sharing before the Merger.
There can be no assurance that the assumptions used in the preparation of the Pro Forma Information or presenting Konecranes’ financial information in the Pro Forma Information in Cargotec’s presentation format will prove to be correct. The actual results of the Merger may materially differ from the assumptions used and the pro forma adjustments reflected in the Pro Forma Information. Further, the accounting policies to be applied by the Future Company in the future may differ from the accounting policies applied in the Pro Forma Information.
The following table sets forth the key figures of the Pro Forma Information for the dates and periods indicated. The information is unaudited unless otherwise indicated.
| As at and for the nine months ended 30 September 2020 | For the year ended 31 December 2019 | |||||||
| (MEUR, unless otherwise indicated) | Cargotec historical | Konecranes reclassified | Merger | Future Company pro forma | Cargotec historical | Konecranes reclassified | Merger | Future Company pro forma |
| Sales | 2,390.6 | 2,242.1 | - | 4,632.7 | 3,683.42) | 3,326.9 | - | 7,010.2 |
| Operating profit | 52.8 | 111.7 | -50.3 | 114.1 | 180.02) | 153.2 | -161.3 | 171.9 |
| Comparable operating profit1) | 157.0 | 158.7 | - | 315.7 | 285.8 | 279.5 | - | 565.2 |
| Net income for the period | 1.4 | 67.7 | -35.6 | 33.5 | 89.42) | 82.8 | -129.0 | 43.2 |
| Basic earnings per share (after the share split) 3), EUR | 0.09 | 0.11 | ||||||
| Total assets | 3,912.4 | 4,104.2 | 1,053.4 | 9,070.0 | ||||
| Total equity | 1,294.2 | 1,207.5 | 695.2 | 3,196.9 | ||||
| Interest-bearing net debt | 851.4 | 742.7 | 229.5 | 1,823.6 | ||||
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1) In connection with the Merger, the Future Company will define measure comparable operating profit to exclude in addition to the items significantly affecting comparability also the impacts from the purchase price allocation. Historically, Cargotec has excluded only items significantly affecting comparability from its comparable operating profit.
2) Audited.
3) As adjusted with the effect of the share split. Prior to or in connection with the completion of the Merger, Cargotec will effect a 3 for 1 split of its shares, where Cargotec will issue new shares without payment to its shareholders in proportion to their existing shareholding.
Conversion of Class A shares to Class B shares
If the Extraordinary General Meetings of Cargotec and Konecranes to be held on 18 December 2020 approve the Merger, Cargotec’s Board of Directors will propose to the next Annual General Meeting that subsection “Conversion of Class A shares to Class B shares” of 3 § (Share classes) of Cargotec’s Articles of Association be amended, in essential, as follows:
Cargotec’s class A shares may be converted into class B shares at a one-to-one ratio (1:1) at the demand of a shareholder or in case of nominee-registered shares at the demand of an asset manager entered into the book-entry register. The demand must be presented in writing and may be presented any time. The demand must state the number of shares to be converted as well as the book-entry account in which the book-entries corresponding to the shares have been entered.
A conversion demand made after Cargotec’s Board of Directors has resolved on convening a general meeting but before the next general meeting will be handled only after the general meeting and a possible record date following the meeting. Cargotec may request that a lock-up be registered in the shareholder’s book-entry account for the duration of the conversion procedure. Cargotec’s Board of Directors will handle the conversion demands and notify the changes in the numbers of shares due to the conversion to the Trade Register without delay.
The conversion demand may be withdrawn until the conversion has been notified to the Trade Register. After the withdrawal, Cargotec will request that a potential lock-up entry be removed from the shareholder’s book-entry account. A class A share will be converted into a class B share when the entry has been duly made in the Trade Register. The shareholder who has presented a request for conversion and the book-entry registrar will be notified of registration of the conversion. If necessary, Cargotec’s Board of Directors may decide on more specific procedures relating to the conversion of the shares. Cargotec’s Board of Directors may also decide that a conversion fee be charged by Cargotec for the conversion.
The exact wording of the conversion clause will be specified in the notice to Cargotec’s next annual general meeting.
Shareholder support
Cargotec and Konecranes announced on 1 October 2020 that shareholders holding in aggregate approximately 44.8 percent of the shares and approximately 76.3 percent of the votes in Cargotec and shareholders holding in aggregate approximately 27.4 percent of the shares and votes in Konecranes have undertaken, subject to certain customary conditions, to attend the respective Extraordinary General Meetings of Cargotec and Konecranes and to vote in favour of the Merger. In addition to the commitments previously announced, Sigrid Juselius Stiftelse has given corresponding commitments to attend the respective Extraordinary General Meetings of Cargotec and Konecranes and to vote in favour of the Merger and Ilkka Brotherus has given a commitment to attend the Extraordinary General Meeting of Konecranes and to vote in favour of the Merger. Thus, Wipunen varainhallinta oy, Mariatorp Oy, Pivosto Oy, KONE Foundation, Ilmarinen Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company, Varma Mutual Pension Insurance Company and Sigrid Juselius Stiftelse, holding on 30 November 2020 in aggregate approximately 45.4 percent of the outstanding shares and approximately 76.6 percent of the votes carried by the outstanding shares in Cargotec, and HC Holding Oy Ab, Solidium Oy, Ilmarinen Mutual Pension Insurance Company, Varma Mutual Pension Insurance Company, Holding Manutas Oy, Elo Mutual Pension Insurance Company and Security Trading Oy, Sigrid Juselius Stiftelse and Ilkka Brotherus, holding on 30 November 2020 in aggregate approximately 28.3 percent of the outstanding shares and votes carried by the outstanding shares in Konecranes, have undertaken, subject to certain customary conditions, to attend the respective Extraordinary General Meetings of Cargotec and Konecranes and to vote in favour of the Merger.
Competition law processes required by the Merger
The Merger will be notified to, for example, the European Commission as well as the competition authorities of the United States and China as well as to several other competition authorities. An obligation to notify a concentration to several competition authorities is customary in transactions in which the target companies operate multinationally. Competition authorities will review the Merger in accordance with applicable statutory merger control laws. The completion of the Merger is conditional upon the obtaining of the required advance merger control clearances from competent competition authorities. Further information on the merger control proceedings will be provided in due course during the process.
Cargotec Corporation
The Board of Directors
For further information, please contact:
Cargotec:
Mikko Puolakka, Executive Vice President and CFO, tel. +358 20 777 4105
Hanna-Maria Heikkinen, Vice President, Investor Relations, tel. +358 20 777 4084
DISTRIBUTION:
Nasdaq Helsinki
Major media
www.cargotec.com
Information on Cargotec and Konecranes in Brief
Cargotec (Nasdaq Helsinki: CGCBV) enables smarter cargo flow for a better everyday with its leading cargo handling solutions and services. Cargotec's business areas Kalmar, Hiab and MacGregor are pioneers in their fields. Through their unique position in ports, at sea and on roads, they optimise global cargo flows and create sustainable customer value. Cargotec’s sales in 2019 totalled approximately EUR 3.7 billion and it employs around 12,000 people. www.cargotec.com
Konecranes is a world-leading group of Lifting Businesses™, serving a broad range of customers, including manufacturing and process industries, shipyards, ports and terminals. Konecranes provides productivity enhancing lifting solutions as well as services for lifting equipment of all makes. In 2019, Group sales totaled EUR 3.33 billion. Including MHE-Demag, the Group has around 17,300 employees in 50 countries. Konecranes shares are listed on the Nasdaq Helsinki (symbol: KCR). www.konecranes.com
Important Notice
In a number of jurisdictions, in particular in Australia, Canada, Japan, South Africa, Singapore and the United States, the distribution of this release may be subject to restrictions imposed by law (such as registration of the relevant offering documents, admission, qualification and other regulations). In particular, neither the Merger Consideration Shares nor any other securities referenced in this release have been registered or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States and as such neither the Merger Consideration Shares to be offered in connection with the contemplated Merger referenced in this release nor any other security referenced in this release may be offered or sold in the United States except pursuant to an applicable exemption from registration under the U.S. Securities Act.
This release is neither an offer to sell nor the solicitation of an offer to buy any securities and shall not constitute an offer, solicitation or sale in the United States or any other jurisdiction in which such offering, solicitation or sale would be unlawful. This release must not be forwarded, distributed or sent, directly or indirectly, in whole or in part, in or into the United States or any jurisdiction where the distribution of this release would breach any applicable law or regulation or would require any registration or licensing within such jurisdiction. Failure to comply with the foregoing limitation may result in a violation of the U.S. Securities Act or other applicable securities laws.
This release does not constitute a notice to an EGM or a merger prospectus. Any decision with respect to the Merger of Konecranes into Cargotec should be made solely on the basis of information contained in the actual notices to the EGMs of Cargotec and Konecranes, as applicable, and the Merger Prospectus as well as on an independent analysis of the information contained therein. You should consult the Merger Prospectus for more complete information about Cargotec, Konecranes, their respective subsidiaries, their respective securities and the Merger.
This release contains forward-looking statements. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give the Future Company’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance, benefits of the Merger, and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “expect”, “aim”, “intend”, “may”, “plan”, “would”, “could”, and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Future Company’s control that could cause the Future Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Future Company’s present and future business strategies and the environment in which it will operate in the future. Neither Cargotec nor Konecranes, nor any of their respective affiliates, advisors or representatives or any other person undertakes any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.
This release may include estimates relating to the synergy benefits expected to arise from the Merger and the combination of the business operations of Cargotec and Konecranes as well as the related integration costs, which are based on a number of assumptions and judgments. Such estimates present the expected future impact of the Merger and the combination of the business operations of Cargotec and Konecranes on the Future Company’s business, financial condition and results of operations. The assumptions relating to estimated synergy benefits and related integration costs are inherently uncertain and are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause the actual synergy benefits from the Merger and the combination of the business operations of Cargotec and Konecranes, if any, and related integration costs to differ materially from the estimates in this release. Further, there can be no certainty that the Merger will be completed in the manner and timeframe described in this release and the Merger Prospectus, or at all.