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Kone CEO: Advance payment scuppered ThyssenKrupp deal

Finnish lift maker Kone refused to pay 2.5 billion euros in advance.

Kone CEO Henrik Ehrnrooth Image: Jyrki Ojala

A 17 billion euro deal for Finland’s blue-chip lift manufacturer Kone to buy rival ThyssenKrupp fell through at the last minute when the German firm demanded a 2.5 billion euro advance payment on the deal.

Kone CEO Henrik Ehrnrooth told Yle that the risk was too high for his firm to proceed.

The payment would have been due when the two companies signed the deal, but Kone would only take ownership at least a year later.

"If ThyssenKrupp did not survive that period, we would have lost that 2.5 billion," said Ehrnrooth. "In the end the risk was too great for us."

Bitter pill

In a statement, Kone said that the deal made sense — but only at the right price.

"Kone continues to believe that a combination of its business with ThyssenKrupp Elevator Technology business would have been strategically compelling," said the statement. "However, any acquisition Kone would pursue would need to come with terms and conditions that are in the best interest of its shareholders, employees and customers."

Analyst Anssi Raussi of OP Group said that selling to Kone was a bitter pill for ThyssenKrupp.

"I think that the price rose too high and that led Kone to withdraw," said Raussi. "Probably the seller has demanded a premium from Kone compared to the capital investors competing to buy the company."

The deal would have united two of the biggest players in the elevator manufacturing sector, and would likely have brought investigations from competition authorities if completed.

Shares in both companies fell on news of the decision, but losses were under five percent of the stock’s value.

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