China's Zoomlion bids for Terex, stokes U.S. national security fears

(Reuters) - China’s Zoomlion Heavy Industry Science and Technology Co Ltd confirmed on Wednesday it had made an offer for U.S. crane maker Terex Corp, a proposal that was opposed by at least one U.S. congressman on national security concerns.

A Zoomlion company logo is seen next to its excavators at an exhibition in Shanghai, November 29, 2012. REUTERS/Stringer

Terex said it continued to recommended an offer struck with Finnish rival Konecranes in August and that it was in talks with Zoomlion, whose offer the U.S. company had made public on Jan. 26.

U.S. member of Congress Duncan Hunter raised concerns about a possible Zoomlion-Terex deal in a letter to U.S. Treasury Secretary Jacob Lew, citing the Chinese company’s longtime association with China People’s Liberation Army.

“The fact that a leading PLA supplier is seeking to purchase an American company that provides critical infrastructure equipment to a number of government agencies ... demands that the agreement undergo thorough scrutiny,” Hunter said.

Terex shares rose as much as 8 percent to $22.08 on Wednesday. But they stayed well below Zoomlion’s offer of $30 – a price the stock has not hit since November 2014 – indicating investors do not expect the deal to go through.

Zoomlion, a construction machinery maker, and Konecranes have both bid for Terex for the same reason – to help them better cope with cooling Chinese and weak European demand.

Reuters reported in January that a Zoomlion-Terex deal could be blocked by the Committee on Foreign Investment in the United States (CFIUS).

Terex has 97 so-called priority-rated contracts with the U.S. government that could attract CFIUS scrutiny. It also provides mobile cranes in ports that are seen as a critical part of U.S. infrastructure.

Zoomlion said on Wednesday it was confident its deal, which valued Terex at about $3 billion, would win regulatory approval.

A number of offers from Chinese companies to buy or invest in U.S. companies have fallen through due to concerns about national security.

Fairchild Semiconductor International Inc on Tuesday rejected an offer from China Resources Microelectronics Ltd and Hua Capital Management Co Ltd on concerns that U.S. regulators would reject the deal.

Zoomlion had warned last month that its 2015 net profit would fall by up to 90 percent due to a slowdown in China.

Terex itself, late on Tuesday, reported a lower-than-expected quarterly profit and forecast 2016 earnings below analysts' estimates, hurt by continued weakness in the "macro operating environment." (

Reporting by Anne Marie Roantree in Hong Kong, and Ankit Ajmera and Arunima Banerjee in Bengaluru; Editing by Miral Fahmy, Kirti Pandey and Savio D’Souza