Future ownership of the Demag crane businesses looks likely to go to financial investors rather than to other equipment manufacturers.
Siemens, the owner, appears set on a swift sale of both Demag Mobile Cranes (DMC) and Demag Cranes & Components (DCC), possibly combined into a single package.
Initially Siemens indicated that it wanted to keep the overhead crane operation DCC but has now decided that it does not fit with its own operations. Siemens’ core materials handling business is in providing process systems on a turnkey basis, while DCC is more focused on selling product. Sources involved in the bidding process have indicated that Siemens vetoed an offer from Manitowoc for DMC – a deal that many within DMC favoured – because it thought it could get a better price by bundling the mobile cranes together with the higher value overhead crane business. Manitowoc was not interested in buying DCC as well.
Siemens is now working to a timetable that sees a single sale being completed before the end of June. Two separate trade sales, for example selling DCC to KCI Konecranes which has expressed interest, are likely to involve many months and possibly up to a year of regulatory approval procedures. Siemens wants the cash more quickly and thus is now taking bids from financial investors for both companies as a single package.
A spokesman for Siemens Dematic, the Siemens division that is parent company to both Demags, confirmed that Siemens was looking for ‘an external solution’ to both companies, but said that this could possibly involve joint ventures rather than outright sale.
The spokesman denied that Siemens wanted to sell the two companies as a single package. However, one of the bidding groups said that that was the basis on which bids were now being prepared.
DCC has EBIT (earnings before interest and taxation) of about Euro 50m, while DMC has EBIT of about Euro 20m. This could indicate a sale price of about Euro 500m for DCC and Euro 200m for DMC, or possibly less because the cyclical nature of the mobile crane market makes it less attractive.
The recent history of financial investors in the crane business, notably at Grove which is also now back up for sale, has diminished the enthusiasm of potential investors for mobile crane companies. A buyer of the combined Demag businesses is likely to motivated by opportunities to build up the DCC operation. Given the lack of synergy between DMC and DCC (that is why previous owner Mannesmann ran them as separate companies) it is possible that ownership of Demag Mobile Cranes, despite its strong product line and market share, would remain unresolved.
If the future owner did choose to sell-on the mobile crane business, it could opt to retain ownership of Gottwald, a stand-alone operation within DMC that produces harbour mobile cranes and other specialist equipment.
