German forklift maker Kion has agreed to buy U.S. firm Dematic for $2.1 billion, or €1.9 billion, to combine one of the world’s biggest producers of pallet and forklift trucks with a supplier of warehouse logistics products and services.
Shares of Kion fell as much as 8 percent in Frankfurt following the announcement on Tuesday. The stock traded down 7.3 percent at €45.19 by 3.49 p.m. local time, reaching a 3-month low.
Kion, based in Wiesbaden near Frankfurt and partially controlled by Chinese firm Weichai Power, will buy Atlanta, Georgia-headquarted Dematic from funds managed by U.S.-based AEA Investors and the Ontario Teachers’ Pension Plan, Kion said Tuesday. Including liabilities, Dematic is valued at $3.25 billion.
With the purchase, which is expected to be completed in the fourth quarter this year, Kion follows a similar move by its German rival Jungheinrich, which expanded its automation possibilities last year by acquiring Munich-based warehouse equipment maker, the Mias Group.
The combination of Kion’s industrial trucks and Dematic’s fully automated warehouse products would improve the combined group’s growth perspective in the markets for online retailing, where many products are stored in wahrehouses, and digitalization, Kion said.
The German company would fund the deal by issuing shares and debt. Its Chinese shareholder Weichai Power, which owns 38.3 percent of Kion, supported the issue of 10 percent of new shares, a move which “utilize the entire currently existing authorized share capital,” Kion said.
Dematic’s roots date back to 1819 when one of its predecessor companies started as Demag Cranes & Components in the town of Wetter an der Ruhr in the Ruhr Region, known as Germany’s Rust Belt. It was part of industrial group Siemens in 2000 and sold to private equity firm Triton in 2006, who divested it again in 2012 to the AEA Investors and Ontario’s pension fund.