HELSINKI (Reuters) - Finnish crane maker Konecranes (HE:KCR1V) is buying Terex Corp's (N:TEX) Material Handling & Port Solutions (MHPS) unit for 1.13 billion euros (890.47 million pounds), in a move that cancels a proposed full merger and allows the U.S. firm to talk to a rival suitor.
Konecranes and Terex agreed to an all-share merger in August 2015, hoping a deal would help them better cope with cooling Chinese and weak European demand.
But Terex this year received a $3.4 billion non-binding cash bid from China's Zoomlion <000157.SZ>.
"The agreement provides Terex with the ability to continue to pursue discussions with Zoomlion Heavy Industries Science & Technology Co.," Terex said in a statement on Monday.
Under the new deal, Terex becomes a 25 percent shareholder in Konecranes and the Finnish company will aim for synergies of about 140 million euros annually from buying the MHPS unit within three years.
The MHPS unit had sales of about 1.39 billion euros last year, compared with Konecranes' revenue of 2.13 billion euros.
"Both companies got what they wanted," said Juha Kinnunen, analyst at Inderes Equity Research. "Compared with the estimated value for the whole company, the price seems high for just one business. But it's the business Konecranes wanted, so it probably makes sense to pay a bit more."
Konecranes shares jumped 10 percent in early trading.
Terex has the right to terminate the deal before the end of the month for a fee of $37 million, if Terex and Zoomlion agree on a sale of Terex as a whole.
Zoomlion's bid for Terex has sparked some national security concerns in the United States, with a congress member noting the Chinese company's long-time association with China People's Liberation Army.