Lifting and materials handling solutions company Terex Corporation and cranes and lifting equipment manufacturer Konecranes will merge, pending shareholder approval.

The merger, which had been approved by both companies’ boards, would be carried out in a stock-for-stock merger of equals, with Terex shareholders to receive 0.80 Konecranes shares for each Terex share held.

This would be followed by an estimated €1.4-billion share buyback plan, which would be executed within 24 months of closing.

The new company, Konecranes Terex, was expected to list on the Nasdaq and the NYSE, while having head offices in Hyvinkää, Finland, and Westport, in the US.

The two companies expected the merger to lead to financial benefits of at least €110-million incremental earnings before interest and tax within three years of closing, with an additional €32-million post-tax benefit from financing, cash management and structure optimisation, implemented within the first year of closing.

Terex CEO Ronald DeFeo would head up the combined entity as CEO, while Konecranes chairperson Stig Gustavson would serve as the new company’s chairperson.

Terex shareholders would hold 60% of the enlarged entity and Konecranes shareholders the balance.

The transaction was subject to approval by both Terex and Konecranes shareholders, regulatory approvals and customary closing conditions. Based on the outcome of these decisions, the companies believed that it would close in the first half of 2016. Until then, the two companies would continue to operate as separate and independent companies.

“We are convinced that bringing these two highly complementary businesses together will create significant value for our customers, by enlarging our family of leading brands and broadening our geographic presence,” Terex said in a statement.

Konecranes Terex would be the parent to a family of brands in the industrial lifting, port solutions, aerial work platforms and cranes sectors, including Demag, Konecranes, Terex and Genie.

The Terex, Powerscreen, CBI, TerexFuchs and TerexFinlay brands would continue to serve the materials processing, recycling and construction sectors, while the combined range of products would offer comprehensive solutions tailor-made for specific needs.

The companies believed the merger came at the right time, as global growth remained muted, hampered by developed markets being sluggish and developing markets being weak.

Further, Terex said in a presentation that there was still uncertainty across a number of end-markets, paired with weak commodities and a depressed nonresidential construction market. It added, however, that the residential construction sector was recovering slowly.

It further highlighted that with ageing equipment fleets, which provided opportunities in service and replacement demand building, as well as an ageing industrial workforce, which provided the opportunities for service growth, the merger would be beneficial to both companies.

In its industrial lifting and port solutions development, Terex would have access to an enlarged combined installed base, which provided better opportunity for service capabilities.

“The combination of strong standalone service networks and concepts achieves critical mass to unlock about €7.7-billion in the in-house service market,” Terex said.