FACTBOX-Demag's businesses and its appeal to suitors

Mon May 2, 2011 10:42am EDT

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May 2 (Reuters) - A $1.3 billion bid by U.S. construction machinery maker Terex (TEX.N) for Demag D9CGn.DE has increased speculation that Finnish competitor Konecranes (KCR1V.HE) could approach the German company again. [ID:nLDE7410AV]

Here is an outline of Demag's businesses and what appeals to its peers.

INDUSTRIAL CRANES

Demag is the world's second largest producer of industrial cranes, with a market share of 13 percent, behind Konecranes, which has close to 15 percent share, according to HSBC analysts.

Industrial cranes is the hardware unit of Demag, manufacturing complete cranes, both standardised and bespoke, as well as components such as rope hoists, travel units and motors.

Other main competitors of Demag in this sector include Columbus McKinnon (CMCO.O), ABUS Crane Systems and Kito Corp (6409.T).

In the year ending Sept. 30, 47.3 percent of Demag's total sales of 931.3 million euros came from industrial cranes.

By acquiring Demag, Konecranes would close to double its market share in industrial cranes, consolidating a fragmented market.

While Terex has a cranes unit, which contributed 40 percent of its 2010 net sales of $4.4 billion, it is not a major competitor of Demag in industrial cranes, as its cranes are more geared towards construction, materials-handling and ports rather than Demag's industrial focus on manufacturers and engineers.

PORT TECHNOLOGY

Demag offers products and services to ports and terminals through its port technology unit. It is a market leader in specialised products such as mobile harbour cranes that help handle cargo.

Other main competitors of Demag in this sector include Konecranes, Terex, Cargotec's (CGCBV.HE) Kalmar, Shanghai Zhenhua Heavy Industry (600320.SS) and Liebherr International.

In the year ending Sept. 30, 20.4 percent of Demag's total sales came from port technology.

Konecranes has a wide portfolio in port cranes which it says gives it a market position between No.3 and No.5 depending on the product. By tapping Demag's port niches, it would complement its offering and boost its market share.

Ports were cited by Terex as one of the main drivers for its bid. They currently make up only 20 percent of the sales of its cranes unit, which offers a range of products for picking up and stacking shipping containers and other load at terminals.

SERVICES

Demag offers refurbishment and maintenance services, provides spare parts and acts as an outsourcing partner through its services unit. It boasts the largest installed base of cranes and electric hoists in the world of more than 660,000.

Demag competes with other crane manufacturers to provide such services, as well as with in-house service departments of its clients and a multitude of small service providers.

In the year ending Sept. 30, 32.3 percent of Demag's total sales came from services.

The unit would complement the business of Konecranes, which is already a market leader in crane maintenance services. On the other hand, a deal would significantly boost Terex's cranes portfolio, which is a smaller player in this space.

Sources: Companies' websites

(Reporting by Greg Roumeliotis; Editing by Louise Heavens)

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