Demag AG, the manufacturer of Gottwald harbour cranes and Demag industrial cranes, has been the subject of takeover speculation since declining an approach from industrial crane manufacturer Konecranes at the end of 2010. Shortly after the Konecranes offer became public, it was reported that Terex had appointed Goldman Sachs to look into a takeover bid.

Terex, in its current form, was built in part by a series of acquisitions, including of the mobile and crawler crane side of the Demag brand, purchased in 2002. Demag AG remains a separate business. If Terex were to purchase Demag AG, it would add harbour mobile cranes to the container handling equipment business it acquired from Fantuzzi in July 2009, as well as industrial cranes that do not currently form part of the Terex business..

Demag AG confirmed receipt of the announcement, saying it was unsolicited. The German-based manufacturer released Q2 2010 results on May 4, two days after the Terex bid announcement. The results show Demag AG orders up 40% year-on-year in the six months to 31 March 2011. For the second quarter, order intake was up 28.8%. In the second quarter, revenue was up 12% to €254.6m, and net income after tax up 63.9% to €7.5m from €4.6m.

In a release announcing the bid, Terex CEO Ron DeFeo said, “Our companies are highly complementary. By combining our businesses, we would add a new product category of industrial cranes and hoists, and create the leading worldwide player in port equipment. Demag products are competitive and innovative. The company is professionally managed, with highly motivated staff, and Terex will draw on this for both Demag’s ongoing success – and the future of Terex as a whole. Terex intends to build on the strong brand and service franchise of Demag in Germany and abroad. This transaction is predicated upon growth and not cost reduction.”

After the announcement of the bid, Demag AG shares rose from €36.295 to a high of €46.90. They currently stand at €46.40, almost €5 a share higher than Terex’s offer price, suggesting some investors expect a bidding war to push the value of the company higher.