Konecranes, Cargotec drop merger plans after UK watchdog veto

(Reuters) -Finnish engineering groups Konecranes and Cargotec decided on Tuesday to cancel their planned merger after the United Kingdom Competition and Markets Authority (CMA) blocked the transaction, citing competition issues.

The British watchdog decided to block the potential 4.5 billion euro ($5.0 billion) deal earlier on Tuesday. [nL3N2VW1GJ]

The merger, which would combine engineering group Konecranes and cargo handling machinery maker Cargotec, would harm competition in the supply of container handling equipment products, the CMA said.

“UK customers would have few remaining alternative suppliers after the merger,” the regulator said in a statement.

Konecranes and Cargotec, which announced a merger of equals in October 2020, compete closely in the UK.

The boards of directors of Konecranes and Cargotec did not find any satisfactory solution which would have addressed the concerns of the CMA, the companies said in a statement. Both groups will continue as fully independent entities, they added.

Konecranes shares rose 3% and flattened around 1030 GMT, while Cargotec stayed up 2%. Commenting on the share reaction, Inderes analyst Erkki Vesola said investors may have questioned potential benefits of the deal and those worries were now over.

“I guess investors have been concerned of the impact the remedies offered (…) would have had on merger synergies and the whole merger rationale”, Vesola said, adding there may have also been fears of additional requirements for the deal to be completed.

The companies won European Commission antitrust clearance for the deal in February. However, the transaction required approval from all relevant authorities, including CMA, the companies said.

($1 = 0.9081 euros)

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