Terex's 'Non-Zoomlion' Share Value Is About $21

Terex Corporation TEX announced the termination of its discussions with Zoomlion, associated with the proposed acquisition bid of $31 per share, due to Zoomlion’s inability to offer a fully financed, binding proposal.

Jefferies’ Stephen Volkmann maintained a Buy rating on Terex, while lowering the price target from $30 to $21.

“In line with our previous scenario analysis, we see "non-Zoomlion" share value around $21, but bump our target multiple up to account for optionality regarding end markets and potential sales of other assets,” Volkmann explained.

Additional Asset Sales Possible

Despite Zoomlion’s bid for Terex at $31/share seeming to have fallen through, the analyst believes that the sale of MHPS and the Zoomlion bid would open up opportunities for the potential sale of additional assets by Terex.

Volkmann expects AWP and Crane to be the most likely candidates for a sale. The analyst explained that these businesses were focuses and had “strong brand equity, a large installed equipment base and good global distribution, and smaller size,” which would make a deal possible.

MHPS Sale

Volkmann also pointed out that the sale of MHPS to Konecranes was progressing on track and was expected to generate $770 million in after-tax cash proceeds, as well as annual equity income of 25 percent of the net income from Konecranes, going forward.

“Assuming TEX uses all of the cash proceeds for debt repayment, the net impact would be an annual deleveraging benefit of $22mln. or about $0.15/share,” Volkmann stated.