Key insights
- Kone's acquisition of TK Elevator for $34.4 billion creates the world's largest elevator maker, surpassing Otis. While Thyssenkrupp shares surged, antitrust scrutiny is expected, potentially impacting the deal's closure. The deal itself has a limited direct impact on US equities, but increased consolidation in the industrials sector could create headwinds for US-based Otis.
Finland's Kone has agreed to buy German rival TK Elevator in a deal valued at 29.4 billion euros ($34.4 billion), marking one of Europe's biggest takeover agreements in recent years.
The cash and share agreement, which had been rumored in recent days, would create the world's largest elevator maker, overtaking rivals such as U.S.-based Otis and Switzerland's Schindler.
Kone said the deal would result in estimated synergies of 700 million euros on an annual run-rate basis.
"For over a century, both KONE and TKE have successfully developed their businesses, in tandem with an urbanizing world. By uniting, we are laying the foundation for an even more innovative company, well positioned for long-term success," Kone CEO Philippe Delorme said in a statement.
Kone shareholders holding just over 40% of all outstanding shares and approximately 74.3% of total votes have agreed to support the deal, the company said.
TK Elevator CEO Uday Yadav said the two companies share a "deep respect" as he welcomed the announcement.
"Together we will bring the very best of both companies to our customers, our people, and the cities we serve. The best of our story lies ahead," Yadav said.
Shares of German steel company Thyssenkrupp surged 14% on the news. TK Elevator became an independent company after separating from Thyssenkrupp in 2020. Private equity firms Advent and Cinven bought TK Elevator for around 17 billion euros at the time.
The proposed merger is expected to face industry scrutiny, with Schindler telling Reuters late last month that it was prepared to challenge any such deal before antitrust authorities.