Kone’s agreement to combine with TK Elevator marks a bold wager that Europe’s antitrust climate may be shifting enough to accommodate the creation of a continent-wide industrial champion. The Finnish group is moving ahead with a cash-and-share transaction that values the German lift maker at €29.4 billion, a deal that would unite two of the sector’s best-known names and create the world’s largest elevator and escalator company by market value.

The timing is significant. Reuters reported that Kone’s last attempt to join forces with TK Elevator fell apart six years ago amid competition worries, when the German business was still within Thyssenkrupp’s orbit. This time, Kone is leaning on a broader policy debate in Brussels over whether European firms should be allowed more room to merge in order to compete with larger rivals in the United States and Asia. People familiar with the process told Reuters that a planned overhaul of EU merger rules could eventually give companies more scope to argue that scale, resilience, sustainability and innovation justify consolidation.

For Kone, the prize is substantial. According to the companies and advisers involved, the combined group would employ more than 100,000 people worldwide and generate annual sales of about €20 billion. Reuters calculations put the new company’s market value at just under €49 billion, comfortably ahead of Schindler and Otis. The deal is also expected to deliver around €700 million in annual savings and strengthen Kone’s position in the Americas, where TK Elevator has a stronger footprint.

Regulatory approval, however, remains the central test. Kone chief executive Philippe Delorme said the company was confident it could secure the necessary clearances, but he gave no details on potential concessions. Danske Bank analyst Panu Laitinmaki said he believed the transaction had a better chance of approval than similar deals would have had a few years ago, while still expecting divestments to be required. Kepler analysts told Reuters that a full EU phase two investigation looked likely, with scrutiny probably divided by market, segment and geography, including new installations, modernisation and maintenance. Swiss rival Schindler has already said it would challenge the tie-up.

The transaction is expected to close no earlier than the second quarter of 2027, subject to regulatory and shareholder approval. Skadden, which is advising Kone, and Roschier, which is advising the Advent and Cinven consortium, both described the deal as a €29.4 billion combination. For Brussels, the case will become an early test of whether Europe’s competition policy can adapt to a new argument: that building bigger regional players is not a threat to industrial policy, but part of it.

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Source: Noah Wire Services