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Cargotec is assessing a separation of its core businesses Kalmar and Hiab into two standalone companies, in an effort to pursue sustainable profitable growth opportunities independently.
The intention would be to separate Kalmar as a new listed company by means of a partial demerger from Cargotec.
Kalmar-related assets and liabilities would be carved out from the current listed Cargotec, while current Cargotec shareholders would own with the same proportion of the newly established Kalmar listed company.
The planning of the potential partial demerger is intended to be carried out during 2023 and the potential execution and separate listing of Kalmar on Nasdaq Helsinki would, if carried out, take place in 2024.
As announced in November 2022, Cargotec’s MacGregor business will not be part of its portfolio in the future and the company is looking for a solution in 2024.
If the planned actions are completed, there would be three separate businesses: Kalmar, Hiab and MacGregor.
Under the strategy, the aim is for Kalmar to be a technology forerunner in container handling and heavy logistics, focused on making the industry electrified and more sustainable. Meanwhile, Hiab would be a specialist in on-road load handling with M&A potential.
Cargotec’s chair of board Jaakko Eskola said: “The separation of Kalmar and Hiab would be the logical next step in the growth journey. The board is convinced that the separation would unlock shareholder value by allowing both businesses to pursue sustainable profitable growth opportunities independently.
Cargotec’s President and CEO Casimir Lindholm said: “Kalmar and Hiab serve different customers and have limited cross selling synergies. Both businesses have ambitious growth plans and we are now assessing if those would be better served as separate standalone businesses.
“Kalmar has recently gone through a major transformation to become a more focused business and has an excellent foundation in place to continue to grow independently. Hiab has a proven track record of profitable growth and M&A.”
One further benefit of the transaction is that Kalmar and Hiab would not compete with each other over capital allocation, noted Lindholm on a conference call.
Based on the Cargotec board’s initial assessment, the planned partial demerger would be expected to improve Kalmar and Hiab’s business performance through higher agility, decisiveness and stronger management focus.
In addition, as two standalone businesses, the companies could achieve faster organic and inorganic growth thanks to a more tailored capital allocation strategy and flexible access to external capital.
Cargotec’s board of directors believes the planned separation would improve the governance and simplify the structures of the separate entities and provide greater transparency and accountability.
It noted that it will only recommend the planned transaction if upon final assessment there is evidence that enhanced shareholder value can be attained.
Meanwhile, Kalmar saw sales increase by 31% to €485m in the first quarter of the year, with high demand for services and eco portfolio solutions, despite delays in larger project purchase decisions.
The manufacturer’s comparable operating profit margin rose to 13%, driven by higher sales, improved management of supply chain and lower losses related to heavy cranes business.
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