Kion to buy Dematic for $2.1bn

German supplier of forklift trucks and warehouse equipment maker Kion has agreed to buy US logistics company Dematic for $2.1bn on Tuesday in a bid to become a global leader in intralogistics solutions.

Kion agreed to buy Dematic from funds managed by Ontario Teachers’ Pension Plan and AEA Investors and the price gives Dematic an an enterprise value of $3.25bn.

The acquisition, which is expected to close in the fourth quarter of 2016, will initially be funded by a bridge loan of €3bn. Kion intends to refinance the acquisition through equity, long-term capital markets and bank debt.

The deal will create a global provider with close to 30,000 employees and more than €6.7bn in revenue for the 2015 calendar year.

"Kion Group's strong cash flow generation and debt reduction over the last years since the initial public offering has provided us with the balance sheet strength for such a transformational transaction," said the company's chief financial officer Thomas Toepfer.

"We have solid financing in place to fund the transaction with a prudent mix of equity and debt in line with our conservative financial policy that will maintain our financial profile as a good cross-over credit."

Ulf Henriksson, chief executive of Dematic, said: "With a shared vision and commitment to research and development, the combined company will continue to focus on superior customer solutions with significant investment in this area. Together, Kion Group and Dematic will jointly define a new era in material handling solutions."

After the transaction, Dematic will be integrated into Kion to form an added fifth unit, which will also include the Egemin Automation and Retrotech businesses. The unit will be headed by Henriksson as its president.

At 1035 BST, Kion shares were up 2% to €47.74.