May 9, 2011 / 8:28 AM / 7 years ago

UPDATE 2-Cevian says Terex offer for Demag Cranes too low

* Terex offering 41.75 euros to take over Demag

* Cevian, largest Demag shareholder, dismisses offer

* Demag shares flat, above the Terex offer price

(Adds detail, background)

FRANKFURT, May 9 (Reuters) - Cevian, the biggest shareholder in Demag Cranes D9CGn.DE, said an 884-million-euro ($1.3 billion) takeover offer by Terex (TEX.N) was too low, upping the pressure on the U.S. company to sweeten its offer for the German crane maker.

“The proposed offer of 41.75 euros per share is completely inadequate and in no way reflects the value potential of the company,” Lars Foerberg, founding partner of Cevian Capital told Reuters on Monday.

Cevian’s stake of just over 10 percent -- bought last year -- gives the Swedish activist investor clout while the management of Demag ponders the takeover offer by the U.S. construction machinery maker. [ID:nLDE7421CC]

Demag shares were flat, trading at around 46.29 euros at 1445 GMT on Monday, above the Terex offer.

Terex declined to comment.

Cevian has, in the past, backed Demag’s management as it sought to pursue a standalone strategy as foreign predators circled. Cevian, which bought its Demag stake about a year ago, often holds investments for periods of 3-5 years.

There has been no contact between Cevian and Terex, a source close to the U.S.-based crane maker said.

Demag’s management last year brushed off approaches by Finland-based Konecranes KCR1V.HE and Terex. [ID:nWEA1609] [ID:nLDE64K0HR]

At about the same time, Cevian gained a seat on the board of Demag. [ID:WEA3886]

The Swedish investor, which in the past has taken stakes in Munich Re (MUVGn.DE), Old Mutual (OML.L), Volvo (VOLVb.ST), Panalpina (PWTN.S), Swedbank (SWEDa.ST) and Wolseley WOS.L, said in late May 2010 it bought a 10 percent stake in Demag when the shares were at 24.58 euros. [ID:nLDE64K0HR]

    Cevian’s stance mirrors that of other big shareholders.

    Norwegian investor Odin Forvaltning, one of Demag’s 20 biggest shareholders, has said it sees the value of Demag at above 50 euros a share.

    British-based hedge fund Centaurus, U.S.-based Elliott or the newly invested Guernsey-based Boussard & Gavaudan (BGHLC.AS) have not expressed their views yet.

    Keith Springer, president of Springer Financial Advisors in Sacramento, California, who does not own Terex shares but has followed the saga, agreed.

    “(Terex‘s) European counterparts are probably looking for high 40s, probably 49-50,” he said.

    “It is a ‘get-big-or-go-home’ kind of economy. You are going to see larger companies gobble up smaller companies all over the place,” he said. “(Demag) can do hardball because they do not have to do the deal.”

    Demag could try to look for a white knight among the likes of Finland’s Konecranes KCR1V.HE, Korean Hyundai Heavy (009540.KS) or Chinese ZPMC (600320.SS), said fund manager Alexandra Morris from Odin Forvaltning.

    Crane maker Konecranes had expressed interest in Demag but earlier this year said it would not pursue a hostile approach. [ID:nLDE71303Y] [ID:nLDE69615Y] [ID:nLDE7410AV] (Reporting by Arno Schuetze and Edward Taylor, additional reporting by Nick Zieminski; Editing by Louise Heavens)

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