Harnischfeger Industries Inc has agreed to sell 80% of its cranes subsidiary P&H Materials Handling to the private investment firm Chartwell Investments Inc for about $340m in cash.
Rival overhead crane manufacturer KCI Konecranes had been swift to declare its interest when the sale was first announced last year but found the asking price too high.
“At this price level, an acquisition would have been clearly dilutive for KCI Konecranes’ shareholders,” the company said.
Harnischfeger expects to close the Chartwell deal by the mid-year. Under the deal, Harnischfeger receives preferred stock and royalty payments from the new company for 10 years. P&H had record sales of $353m in 1997.
Proceeds from the deal are expected to go to paying down debt and buying back stock as part of the company’s previously announced plans to repurchase 10m shares.
With New York-based Chartwell taking majority ownership rather than a competitor, further consolidation of the EOT crane industry, which has seen a lot of merger and acquisition activity in recent years, has been avoided. For P&H’s management and employees, a buyer from outside the industry probably represents the best safeguard for their future.
KCI Konecranes’ president and chief executive Stig Gustavson said that, regardless of his failure to take over P&H, KCI’s American business was “developing very well”.
Gustavson said: “1997 year sales amounted to $185m in North America alone. We see the fast growth continuing.”
