01.08.2019

Tadano completes Demag deal

Tadano has completed the acquisition of the Demag Mobile Cranes business, having paid $215 million for the business as originally agreed, the transaction officially completed today, a month later than originally planned. The deal was originally agreed in February See Tadano to acquire Demag with a completion date planned for the end of June.

The transaction brings together two of the top four mobile crane manufacturers together to create a business that is close to challenging Liebherr in terms of revenues and units produced.

Demag and its affiliates will become a subsidiary of Tadano, with the corporate name changing to Tadano Demag GmbH. The business will be managed by Jens Ennen, who joined Tadano from Manitowoc earlier this year as chief executive of the new subsidiary.
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Jens Ennen

Tadano chief executive Koichi Tadano said: “The Tadano group’s strategy is to become the global leader in the lifting equipment industry and the premier choice with our customers. The Demag Mobile Cranes acquisition is one vital step towards achieving that goal. It expands our penetration into many markets throughout the world, adds lattice boom crawler cranes to our overall product line, and enhances the capacity range of our All Terrain cranes. By working together, we can better respond to our customers’ needs and give them greater added value than ever before.”

"Demag’s transition into the Tadano group will be seamless, and our customers can expect that they will be able to carry out business as usual – right from the very start. For the most part you will continue to work with the same Demag sales, service and parts contacts as you have up until now. Only the last part of their respective e-mail addresses will change from “@terex.com” to “@tadano.com”.

“Demag’s dedicated stakeholders, including customers, distributors and suppliers, among others, infuse the company with great value. While we continue on with the Tadano vision of ‘Pursuing Further Excellence for the World and Future.’”



Vertikal Comment

The short delay in the completion of this deal created some ‘chatter’ about issues arising during the normal transition process towards completion and talk of a price reduction to compensate - this however appears not to have been the case.

Few that know the Demag business well expect its incorporation into Tadano to be easy. The usual challenge of merging of cultures, design philosophy, quality aspirations etc...will probably be easier than usual, given that Demag’s traditional Germanic quality philosophy fits better with Tadano than it ever did with Terex. Some of that has been lost over the years, but Terex had been working hard to recover it over the past three years and it still lies deep within the psyche in Zweibrücken.

However over the years productivity has fallen behind the market leaders and the plant appears to be overstaffed in terms of current production levels, as was reflected in the Terex Cranes results. Reducing headcount in Germany is no easy matter and can be ugly, while Tadano tends to prefer a more consensual and gradual approach to change.

The Demag product line is also dated in parts, and there is still work to be done to recover the brand’s reputation. If Tadano keeps the business as a separate entity – as has been its long tradition with acquisitions, then it is just a matter of time and money. If it pushes for a rapid merger with Tadano Faun the risks could rise dramatically.

One thing is for sure the next year or two will be interesting.