Schindler's leadership has signalled it will legally contest any proposed merger between Kone and TK Elevator, the Swiss elevator manufacturer said in comments made on Tuesday. The chief executive described the potential tie-up as severely disruptive for the sector and pledged to ensure antitrust regulators examine the transaction in every jurisdiction should it be pursued.
According to the company's CEO Paolo Compagna, a union of the two firms would create the world's largest lift maker and displace the current rankings in the market. Compagna used the term "bloodbath" to characterise the level of disruption he expects, citing the necessity of integrating overlapping customer relationships, manufacturing sites and staff from two of the industry's largest players.
Compagna told Reuters that Schindler would not be the only party to bring antitrust concerns to regulators. "I’m sure that we would not be the only one going and making sure that this antitrust will be checked in every possible country," he said, indicating the company plans to raise competition objections across multiple jurisdictions.
The CEO noted that Schindler's stance on a possible Kone bid for TK Elevator is unchanged from its position when similar speculation arose in 2019. In that earlier episode, Kone pursued TK Elevator in a consortium with CVC Capital Partners but was outbid by Advent International and Cinven, who acquired TKE for about 17.2 billion euros. Compagna added that conditions facing the industry are "even more challenging than it would have been in 2019."
Media reports have suggested the value of a renewed Kone approach could reach as high as 25 billion euros, a scale that Compagna said would likely prolong regulatory review and require substantial divestments. He predicted such a process would take multiple years and involve significant asset sales to satisfy competition authorities.
Should regulators require divestitures, Schindler said it would evaluate purchasing any assets put up for sale as part of its bolt-on acquisition strategy. Compagna framed this as a contingent opportunity should a transaction advance to the point where remedy packages are mandated.
The company reiterated its preparedness to engage in antitrust reviews and to consider strategic moves in response to divestitures, while emphasising the potential for market upheaval if two of the industry's largest manufacturers were combined. ($1 = 0.8642 euros)
Key points
- Schindler will challenge any Kone-TK Elevator merger before antitrust authorities and expects other parties to do the same - impacting competition oversight in the lift manufacturing sector.
- CEO Paolo Compagna described the potential deal as a "bloodbath," highlighting the difficulties of merging overlapping customer bases, production sites and teams - affecting manufacturing and commercial operations in the elevators industry.
- Schindler's view on a potential takeover mirrors its stance from 2019; the company said it could pursue buying required divestitures as part of a bolt-on acquisition approach - relevant to M&A activity and asset sales in the sector.
Risks and uncertainties
- Lengthy antitrust reviews: Any merger would likely face prolonged scrutiny and require multiple years to resolve, creating regulatory uncertainty for the lift manufacturing market.
- Extensive divestitures: Regulators could mandate large-scale asset sales to restore competition, which would reshape ownership and production footprints in the industry.
- Industry disruption: Integration of overlapping customer relationships, factories and teams could significantly disturb operations and market dynamics within elevator manufacturing and related service sectors.