Exclusive-Kone plans TK Elevator Europe sale to address antitrust concerns, sources say

Kone May Sell TK Elevator Europe to Satisfy Antitrust Regulators in €29.4bn Deal

Overview of Kone's Proposed Acquisition and Antitrust Measures

By Alexander Hübner and Christoph Steitz

Background of the Acquisition

MUNICH/FRANKFURT, Oct 1 (Reuters) - Kone is planning to launch the sale of most of TK Elevator's European business in a bid to tackle antitrust concerns over the Finnish firm's planned €29.4 billion ($33.3 billion) purchase of its German rival, two people familiar with the matter said.

A sales process for TK Elevator's European business - which comprises elevators, escalators and related services - is expected to be launched in the fall, the people said, with one saying it could start in November.

Details of the Deal

Kone agreed in April to buy TKE from an investor group led by Advent International and Cinven in a deal that would create the world's largest lift maker.

TKE made 27%, or around €2.5 billion, of its sales in Europe last year.

Citi analysts have estimated that European disposals could fetch €2.1 billion in proceeds.

Regulatory and Financial Implications

Antitrust Concerns and Remedies

"Since announcing the transaction, KONE and TKE have been working closely and constructively with regulators," Kone said in a statement. "We have always been clear that remedy divestments may be necessary in some geographies to secure regulatory clearance."

Kone said it remained committed to delivering €700 million in annual synergies from the deal.

Advent, Cinven and TKE all declined to comment.

Market Impact and Industry Context

The deal is set to be one of Europe's biggest takeovers in years and the largest sell-side private equity deal on the continent since records began in 1980, LSEG data shows.

Kone finance chief Ilkka Hara told Reuters in June that divestments in some regions had been anticipated and the deal was not expected to close until the second quarter of 2027 at the earliest.

Regulators will scrutinise the deal because the global market for elevators is highly concentrated, dominated by four players, Otis, Schindler, Kone and TKE.

Strategic Significance for the European Market

The proposed deal would create a European champion that would overtake US-based Otis as the industry's biggest player, at a time when Brussels is trying to protect local industry amid tougher global competition from abroad.

The combined Kone and TK Elevator group made 35%, or around €7.2 billion, of revenue in Europe.

Swiss rival Schindler, which has criticised the deal, told Reuters in July that it saw opportunities to potentially acquire assets as part of any remedy divestments.

Additional Information

($1 = 0.8838 euros)

(Reporting by Alexander Huebner and Christoph Steitz; editing by Matthias Williams, Elaine Hardcastle)