June 7 (Bloomberg) -- Demag Cranes AG owners Kohlberg
Kravis Roberts & Co. and Siemens AG plan to raise as much as
463.5 million euros ($594 million) selling shares of the port
and industrial crane maker to take advantage of container
shipping growth.
As many as 14.95 million shares will be sold for between
26 euros and 31 euros apiece, including 1.95 million in case
of extra demand, Demag said today on its Web site.
Subscription will take place between today and June 19, with
shares of the company, to be based in Dusseldorf, starting
trade on June 20 in Frankfurt.
Siemens, based in Munich, and New York buyout firm KKR are
selling as much as 70.6 percent of Demag Cranes to benefit from
surging global trade, which has spurred orders from mining
companies, metal producers, ports and manufacturers. Shares of
Demag rival KCI Konecranes Oyj of Finland have almost doubled in
value in the past 12 months.
The IPO comes as stock indexes have dropped on concern
economic growth will slow as central banks around the world raise
interest rates to combat inflation. The German DAX index lost 10
percent of its value since May 9, when it reached its highest
level in almost five years. The Dow Jones Stoxx 600 index lost
9.2 percent in the same period.
Ready for Bourse
``Of course we would've preferred a more positive market
environment, but our industry is doing very well so we're ready
for the bourse,'' said Chief Executive Officer Harald J. Joos at
a press conference in Frankfurt. ``We'd be happy if we reached
the MDAX, but that's not up to us to decide.'' The German DAX
Mid-Cap Index tracks 50 medium-sized companies.
Demag Cranes will pay a dividend of 50 percent to 60 percent
of adjusted net income in the current fiscal year, which ends
Sept. 30, Joos said. The company plans to pay 35 percent to 45
percent of profit in ``coming years.''
KKR bought 81 percent of Demag Holding, a group of seven
companies, from Siemens in 2002 for about $409 million, according
to a document KKR sent to fund investors. The German engineering
company still owns the rest.
Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc.
are managing the initial public offering, which includes two of
the businesses: Demag Cranes and Gottwald Port Technology. The
combined company will make crane parts and offer maintenance and
repair services.
`Organic Growth'
``Our strategy is organic growth,'' said Joos. ``We don't
plan any big acquisitions, but don't rule out small purchases for
our services unit.''
Sales at Demag Cranes rose 19 percent in the six months
through March to 465.2 million euros. Earnings before interest
and tax gained 64 percent to 30.9 million euros. The company
employs about 5,600 people and has factories in 16 countries.
Buyout firms use a combination of their own funds and debt
to pay for takeovers, typically seeking to expand the companies
or improve their performance before selling within five years.
