Kone offers $19 billion for Thyssenkrupp unit

FRANKFURT/DUESSELDORF: Finland’s Kone Oyj has offered about €17 billion ($18.9 billion) for Thyssenkrupp AG’s elevator unit, the highest bid so far, drawing scepticism from one of the German group’s labour bosses who said price alone would not cut it.

Kone, which has long championed the advantages of a tie-up between the world’s third- and fourth-largest elevator groups, said on Tuesday that it had made a non-binding bid, a day after a deadline expired.

The group said it saw a “highly complementary geographical footprint of the businesses, substantial value creation on offer from synergies, and joint innovation potential in an operating environment increasingly shaped by digitalisation.”

Kone’s offer represented a premium of about €1 billion over the best offer from leading competitors from the private equity world, according to a person familiar with the matter.

“Offer size alone is not enough,” said labour leader Knut Giesler, deputy supervisory board chairman of Thyssenkrupp’s elevator unit and a member of the powerful IG Metall union.

Workers fear that a sale to Kone could result in substantial job cuts.

“It has to be a safe deal, a safe transaction for the remaining part of

Thyssenkrupp and there have to be assurances for the employees of the elevator division,” Giesler said.

He said all options had to be kept open on the unit, including a selling it to a strategic player, a private equity firm or listing on the stock exchange.

“It’s a beautiful gamble at the moment and one where you don’t show your cards too early,” Giesler said, confirming Japan’s Hitachi Ltd also submitted a bid.

He said a buyer would likely be picked at the middle or the end of February.

Other suitors for the elevator business include a consortium of buyout groups Advent International and Cinven and the Abu Dhabi Investment Authority, which are working with Germany’s RAG Stiftung.

There is also a bidding team consisting of Blackstone Group Inc, Carlyle Group LP and Canada Pension Plan Investment Board and a third group comprising Canada’s Brookfield Asset Management Inc and Singapore’s Temasek Holdings Pte, Reuters previously reported.

The sales process is still ongoing and the field of bidders will get more opportunity to amend their offers by mid-February, sources have previously said.

Kone cautioned in its statement that its proposal was based on certain assumptions and that the terms of a potential binding offer could be subject to change.