Kone strikes $34 billion deal to buy TKE, creating world’s largest lift maker

By Anne Kauranen and Soren Jeppesen

HELSINKI, April 29 (Reuters) – Finnish lift maker Kone agreed to buy German rival TK Elevator (TKE) in a cash and stock transaction valued at 29.4 billion euros ($34.4 billion), it said on Wednesday, a deal that would create ​the world’s largest lift maker.

The transaction with TKE’s private equity owners Advent International and Cinven plus other investors marks one of Europe’s biggest takeovers in years and is the biggest in Finnish history.

It would also be the biggest sell-side private equity deal in Europe since records began in 1980, LSEG data showed, resulting in a combined entity with more than 100,000 employees and annual sales of more than 20 billion euros.

“This combination would meaningfully enhance our ability to meet customers’ growing demand for reliable and sustainable solutions and services,” Kone CEO Philippe Delorme said.

Kone’s shares were down 4.4% by 1057 GMT while Germany’s Thyssenkrupp, which owns a 16.2% stake in TKE, rose 8.1%.

STRENGTH IN MAINTENANCE, SCALE IN U.S.

The merger would give Kone scale in maintenance and modernisation – the most profitable parts of its elevator business.

It would also help Kone, which is strong in Europe and Asia, expand its U.S. footprint, as North America accounted for around a third of TKE’s total sales, which stood at 9.2 billion euros in the 2024/2025 financial year.

Elevator makers have been hit by a prolonged slump in the once booming Chinese property market in recent years, raising the need to seek growth elsewhere.

The combination would yield cost savings estimated at 700 million euros annually, Kone said.

“In terms of synergies as a percentage of revenue of the acquired company, this is a pretty impressive deal, or a deal that stands out positively in terms of the industry environment,” Danske Bank equity analyst Panu Laitinmaki said.

Neither company said how many jobs could be cut as part of the tie-up. The deputy chairman and leading labour representative of TKE called for an extraordinary supervisory board meeting to be held within seven days.

“I note this announcement with great dismay,” said Knut Giesler of German union IG Metall, who also serves as the deputy chairman of TKE’s supervisory board.

ANTITRUST HURDLES

In terms of market value, the combined company would overtake U.S.-based Otis worth $29.7 billion and Switzerland’s Schindler valued at $36.2 billion.

Japan’s Mitsubishi Electric and Hitachi are bigger but elevators are only part of their businesses.

Analysts said the deal will likely face antitrust scrutiny, given the market is already highly concentrated.

Kone said it was confident it will secure approval and expects to complete the deal in the second quarter of 2027 at the earliest.

Schindler has already said it would challenge the deal.

Kone would have to pay a “customary break-up fee”, the size of which was confidential, should the deal fall through, CEO Delorme said on a call.

The deal will test the rival pressures facing Europe of upholding competition while also creating industrial champions that can fight successfully on the global stage.

“We need more growing companies in the global top tier,” Finnish Prime Minister Petteri Orpo said on X.

The European Commission had not yet been notified of the transaction, a spokesperson said.

NEW SHARE OWNERSHIP

Kone will pay 5 billion euros in cash upon the deal closing and issue a further 270 million new shares worth around 15.2 billion euros, corresponding to 33.8% of all issued shares and 18.3% of total votes.

In addition, Kone will take on TK Elevator’s interest-bearing net debt, amounting to about 9.2 billion euros, which it plans to refinance.

The new shares will be held by a company called Vertical Topco, owned by Advent and Cinven as well as Thyssenkrupp and other investors.

Kone’s chairman, Finnish billionaire Antti Herlin, will acquire some 1 billion euros of the new stock once the transaction is completed, ensuring that he will continue to control more than 50% of the voting rights in the merged company.

Kone shareholders with approximately 74.3% of the total votes have agreed to support the transaction, it said.

TRANSACTION LONG IN THE MAKING

Kone has had TKE in its sights for years, making a non-binding offer of 17 billion euros for the company six years ago before dropping it due to antitrust risks.

That deal fell through also due to TKE’s then-owner, Thyssenkrupp, demanding a 2.5 billion euro advance payment despite an expected year-long delay before Kone would have gained control of the firm, Kone’s former CEO recounted later.

Thyssenkrupp sold the lift business to ​Advent International and ⁠Cinven, TKE’s current owners, for $18.7 billion in 2020.

Reuters reported last year that TKE’s owners were also weighing a potential U.S. IPO as an alternative to a sale.

($1 = 0.8546 euros)

(Reporting by Anne Kauranen in Helsinki and Soren Jeppesen in Copenhagen, additional reporting by Essi Lehto in Helsinki, Vera Dvorakova in Gdansk, Foo Yun Chee in Brussels, Christoph Steitz in Frankfurt and Anoush Sakoui and Andres Gonzalez Estebaran in London; writing by Terje Solsvik and Niklas Pollard; editing by Essi Lehto and Elaine Hardcastle)