Terex Corp. (TEX) announced it has received term loan commitments of $1.1 billion and multi-currency revolving lines of credit to fund its 883.9 million euro ($1.3 billion) takeover of Dusseldorf, Germany-based Demag Cranes AG, announced earlier this week.

On May 2, 2011, Terex’s German subsidiary, Terex Industrial Holding AG, made a voluntary cash public tender offer of 41.75 euros per share, which is at a 41% premium to the last undisturbed share price of 29.65 euros and a 15% premium to the closing price on April 29, 2011 of 36.30 euros. The offer requires the acceptance of at least 51% of Demag Cranes shareholders.

Dusseldorf, Germany-based Demag is a leading provider of industrial cranes, crane components, harbor cranes and port automation technology. Terex is the second company to pursue Demag after Konecranes Oyi of Finland approached the German company last year. However, Konecranes abandoned the plan in February following Demag’s refusal.

The term loan is subject to the satisfaction of certain conditions, under which Terex Industrial Holding is obligated to purchase up to all, but not less than 51% of the shares of Demag Cranes AG. The proceeds of the term loans are to be used to allow Terex Industrial to pay for the shares of Demag and all fees and expenses incurred in connection with the transaction.

The agreement also provides for incremental loan amounts of up to $750 million, which can be in the form of revolving credit loans, term loans, or a combination of both, provided that no more than $100 million of the incremental amount may be used for incremental term loan commitments.

The company’s liquidity as of March 31, 2011 totaled $1,219.0 million, which comprised cash balances of $723.7 million and borrowing availability under the company’s revolving credit facility of $495.3 million. Terex’s debt-to-capitalization ratio improved to 40% as of March 31, 2011, from 45% as of December 31, 2010.

Demag’s business complements the existing operations of Terex. With this combination, Terex will add a new product category of industrial cranes and hoists, and become the leading worldwide player in port equipment. The combined entity will have a strong footprint in Europe and emerging markets, especially in China.

In this context, Germany is Terex’s second-largest market and production base. About 22% of Terex’s global headcount are located in Germany. Over the last ten years Terex has acquired four significant German businesses, one being Demag’s former sister company Demag Mobile Cranes in 2002.

Westport, Connecticut-based Terex Corporation is a global manufacturer of a broad range of equipment for the construction, infrastructure, quarrying, mining, shipping, transportation, refining, energy and utility industries.

The company’s manufacturing facilities are located in the U.S., Canada, Europe, Australia, Asia and South America. It operates through four business segments: Aerial Work Platforms, Construction, Cranes and Materials Processing. Terex competes with the likes of Caterpillar Inc. (CAT), Deere & Company (DE) and Komatsu Ltd. (KMTUY). The shares of Terex currently retain a Zacks #3 Rank (short-term Hold recommendation).

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