Konecranes-Terex deal to proceed as China's Zoomlion drops rival bid

By Anne Marie Roantree and Tuomas Forsell

HONG KONG/HELSINKI (Reuters) - China's Zoomlion Heavy Industry Science and Technology Co Ltd has abandoned its $3.4 billion (2.32 billion pounds) bid for U.S. crane maker Terex Corp (TEX.N) after failing to agree terms, clearing the way for a smaller deal between Terex and Finland's Konecranes (KCR1V.HE).

The decision comes after months of merger talks between the three companies and marks the latest setback to corporate China's ambitions to acquire U.S. assets.

Zoomlion and Konecranes had both bid for Terex to help them better cope with cooling Chinese and weak European demand in the cranes business.

Konecranes and Terex had agreed on an all-share merger last August, but Zoomlion emerged as a rival bidder in January and sweetened its unsolicited offer to $3.4 billion in March.

The Finnish company this month scrapped plans for a full merger and instead agreed to buy just part of Terex -- its cranes business for ports and factories -- for 1.1 billion euros ($1.2 billion).

The agreement gave Terex the right to terminate the deal for a fee by the end of the month if its talks with Zoomlion were to proceed.

"No agreement can be reached on the crucial terms," Zoomlion said in a statement on Friday, but declined to specify what the hurdles were.

Konecranes shares rose 4.9 percent in Helsinki while Zoomlion's Hong Kong-listed shares (1157.HK) fell 3.2 percent by 0800 GMT.

"We've reached the result we wanted, and we are very pleased," Konecranes Chief Executive Panu Routila told Reuters, adding that the companies would start integration plans after the summer.

Last week, Konecranes shares jumped as much as 18 percent when the modified deal was announced. The merger is expected to close early next year.

A successful acquisition would have put Zoomlion on a more equal footing with cross-town rival Sany Heavy Industry Co Ltd which has a U.S. assembly plant.

"Without the positive effect due from Terex, Zoomlion will continue to develop slowly at its own pace," said Jiao Yiding, an analyst at China Merchants Securities in Shenzhen.

Last month, Zoomlion posted a record quarterly loss as Chinese heavy equipment makers battle an historic glut of unsold equipment.

The collapse in talks comes after China's Anbang Insurance Group Co said in April it had abandoned its $14 billion bid for Starwood Hotels & Resorts Worldwide Inc (HOT.N), paving the way for Marriott International Inc (MAR.O) to buy the Sheraton and Westin hotels operator.

In January, the United States blocked a bid by Chinese-based investment fund GO Scale Capital for Philips' (PHG.AS) lighting-components business on security grounds.

(Additional reporting by Donny Kwok in Hong Kong and Bengaluru newsroom; writing by Jussi Rosendahl; editing by Edwina Gibbs and Keith Weir)