Demag share volumes set stage for battle for control

By Edward Taylor and Arno Schuetze

FRANKFURT (BestGrowthStock) – Record trading volumes in shares of Demag Cranes (D9CGn.DE: ) signal heightened hedge fund buying as a prelude to a possible battle for control of the German crane maker between management and shareholders.

Around 4.7 million, or 22 percent of Demag’s shares, have changed hands since October 6, according to Reuters data. Its shares have gained 27 percent during that time, boosting the company’s market value to 819 million euros ($1.15 billion).

Short-term investors like hedge funds are building up their stake in the company on hopes of profiting from possible consolidation within the crane sector, two bankers close to the companies said on Thursday.

Demag declined to comment.

The buying was sparked by an informal takeover approach made by Finland-based rival Konecranes (KCR1V.HE: ), and market talk that U.S. rival Terex (TEX.N: ) could enter the fray as an interloper.

Demag confirmed last week it had received informal takeover approaches from companies based in foreign countries, adding it had no interest in pursuing talks.

But investors will likely start pressuring management to consider being taken over, said a banker close to one of the bidders.

One large shareholder, who declined to be named, told Reuters that he would consider selling his stake if the price was right.

A merger of Konecranes and Demag, leading makers of cranes used to load and unload goods in shipping ports, would create a crane-maker with about 15,000 workers and annual sales of 2.6 billion euros.

ACTIVIST INVESTORS

In May, Swedish activist investor Cevian Capital AB said it had built up a stake of just over 10 percent in Demag.

Cevian — which was not available for comment — has been active in the industrial sector, and is also the third largest shareholder in truck maker Volvo (VOLVb.ST: ).

Cevian has also in the past kept ties to a UK activist hedge fund. It initially acquired a five percent stake in Volvo trucks together with UK fund Parvus.

Parvus in turn was seed-funded by another well-known activist investor: The Children’s Investment Fund (TCI).

TCI was involved in a high-profile clash with the management of Deutsche Boerse (DB1Gn.DE: ) when shareholders forced the exchange operator to drop an informal takeover offer for the London Stock Exchange and then forced out Deutsche Boerse chief executive Werner Seifert in 2005.

(Editing by David Cowell)

Demag share volumes set stage for battle for control