Terex Germany GmbH & Co. KG holds indirectly through Terex Industrial Holding AG an 81.92% stake in Demag Cranes. Both the Supervisory Board of Demag Cranes AG and the partners of Terex Germany GmbH & Co. KG have approved the agreement. It still requires the approval by the Annual General Meeting of Demag Cranes AG, which is scheduled to be held on 16 March 2012.
Under the agreement, Terex Germany GmbH & Co. KG offers to acquire the shares of outside shareholders of Demag Cranes AG in return for cash compensation in the amount of EUR 45.52 per no-par value share pursuant to sec. 305 (1) of the German Stock Corporation Act (AktG). Furthermore, the agreement provides for an annual guaranteed dividend payment to outside shareholders of Demag Cranes for the term of the agreement in the gross amount of EUR 3.33 per non-par share (EUR 3.04 net per non-par share). The payment obligations by Terex Germany GmbH & Co. KG under the domination and profit and loss transfer agreement are secured by a comfort letter issued by Terex Corporation.
The cash compensation corresponds to the volume-weighted average price of Demag Cranes shares as determined by the German Federal Financial Supervisory Authority (BaFin) for the relevant three-month period prior to the announcement on 5 September 2011 of the decision of the Management Board of Demag Cranes AG to enter into negotiations about the signing of a domination and profit and loss transfer agreement with Terex Germany GmbH & Co. KG. This reference share price is higher than the business value per Demag Cranes share of EUR 43.23 as determined in an independent evaluation of Demag Cranes AG performed in accordance with IDW Standard S1 by auditors Ebner Stolz Mönning Bachem. This valuation reflects on the one hand the planning of the Management Board of Demag Cranes AG for the next three years, which is based on the Company’s clear and successful strategy geared to sustained and profitable growth. On the other hand, it takes account of the substantially dimmed global economic environment in recent times, which will also impact on the implementation of this strategy. Europe and other parts of the world are experiencing financial and budgetary crisis that is particularly affecting the European banking system and impairing its ability to extend credit to support economic growth. The International Monetary Fund (IMF) recently revised downward its growth forecast for the global economy for 2012 from 4.0% to 3.3% and for 2013 from 4.5% to 3.9%. The IMF believes economic growth will also slow in emerging economies. Furthermore, the US Federal Reserve has scaled down its growth expectations for the US economy.
Uncertainties about how the economy will develop are making it increasingly difficult to give reliable long-term projections, also with regard to demand for the Demag Cranes Group’s products. It now seems possible that the implementation of strategic subprojects may be a challenge in the medium to long term, with corresponding implications for revenue and earnings performance.
Demag Cranes AG is due to publish its interim report on business performance in the first quarter of financial year 2011/2012 on 7 February 2012. The complete wording of the domination and profit and loss transfer agreement, the joint report by Demag Cranes and Terex on the agreement, and the expert opinion prepared by Ebner Stolz Mönning Bachem will be published with the notice convening the Annual General Meeting on 3 February 2012.