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Demag Cranes AG (D9C.XE) softened slightly its opposition to Terex Corp.'s (TEX) attempts to buy the company, revealing it would participate in talks with Terex if the U.S. company is willing to raise its offer for Demag.
A Demag spokesman said in an email statement Wednesday that the German company would consider Terex's takeover if Terex provides "a more attractive offer" than its bid of 41.75 euros per share. That offer is scheduled to expire June 30.
Demag has maintained that Terex's bid is too low and has urged investors not to sell their shares to the Connecticut-based construction-equipment manufacturer. But Demag's opposition to Terex appears to have evolved from earlier in the week when the company indicated that it was considering whether to engage in talks with Terex.
Sharp differences on the structure of any negotiations continue to keep the two companies' executives from scheduling face-to-face meetings. On Thursday, Terex dismissed Demag's demand for a higher price in exchange for any discussions.
"We need to have conversations first" about the benefits Terex would bring to Demag, said Tom Gelston, Terex vice president for investor relations. "Talking about price first is way premature."
So far, Demag has rebuffed Terex's attempts to initiate talks. Terex Chairman and Chief Executive Ron DeFeo attempted to arrange a meeting with Demag executives last week in Germany, but his calls to the company weren't returned.
Terex has said its EUR884 million, or $1.28 billion, offer for Demag is fair and has indicated that it is reluctant to raise its price, even though Demag shareholders appear to be signaling that they want more money. Demag's stock price has been trading well above the level of Terex's tender offer, suggesting that few shareholders are likely to sell their shares to Terex at a lower price. Demag's stock Thursday closed up 0.56% at EUR44.65 a share.
Analysts said Terex has sufficient cash flow and access to financing to support a higher offer for Demag.
"We believe Terex is likely to increase the offer," said Ann Duignan, an analyst for J.P. Morgan, in a note Thursday to investors.
Demag executives, meanwhile, run the risk of a steep drop in the price of their company's stock if Terex's bid for the company collapses. Demag had been trading at EUR36.30 prior to Terex's pursuit. If Terex is unable to obtain at least 51% of Demag's shares by the June 30 deadline, it would have to wait at least a year to make another offer.
"The clock is ticking," said Heiko Ihle, an analyst for Gabelli & Co. "The real problem right now is there's no communication going on. Until you get that resolved, we're going to be just sitting in limbo."
Terex stock was recently up 2.1% at $26.05 a share.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; email@example.com