The Board of Directors of KONE Corporation has decided to begin preparation for the division of the company into two separate corporations.
According to the preliminary plan, the assets and liabilities of the parent company, KONE Corporation, will be divided between two corporations, whose shares will be listed on the Helsinki Exchanges. One of the companies would consist of the business operations of the current KONE Elevators & Escalators division, which would continue under the name KONE Corporation. The other company would consist of the business operations of the current Kone Cargotec division, whose name would be Kone Cargotec Corporation.
Following the demerger, KONE shareholders would receive shares of the new corporations, at no additional cost, in proportion to their existing shareholding. The final decision whether or not to proceed according to the plan developed by the Board of Directors for the division into two corporations will be made in due time by a shareholders’ meeting. The demerger process, including investigation and clarification of potential ramifications, will last approximately a year. The goal is for the shares of the new corporations to be listed on the Helsinki Exchanges during 2005.
KONE has systematically developed both business lines and streamlined their operations. KONE Elevators & Escalators operates globally according to a harmonized business model. Two of the former materials-handling business operations, Kalmar and Hiab, following the divestiture of other businesses, have formed Kone Cargotec. Their operations have been reorganized to increase flexibility and efficiency. These initiatives have supported the growth and profitability of Kone Cargotec’s business.
The demerger of the two divisions has been made possible by the completion of the current structural reorganization and the rapid improvement of KONE’s financial position, based on the proceeds from the sale of businesses and the continuous cash flow from operations. The companies formed by the reorganization will have strong balance sheets.
In the view of KONE Corporation’s Board of Directors, shareholder interests will best be served by separating these business operations so that both companies formed in this way can grow and develop in accordance with their own strategies.
KONE Elevators & Escalators is the fourth largest global elevator and escalator company. Its growth is based on the aging of the population and installed-equipment base in industrialized countries and the booming construction activity brought about by the urbanization of developing countries such as China. KONE maintains some 800 elevator, escalator and building door service centers in more than 40 countries. Personnel as of 30 June, 2004 totaled 24,300. Turnover from elevator, escalator and building door activities in 2004 is expected to total nearly EUR 2.9 billion.
Kone Cargotec is the world’s largest container- and load-handling equipment supplier. The growth of world trade and transportation of goods drive demand for its business units, Kalmar and Hiab. Kone Cargotec has its own sales and service centers in 25 countries and distributors in more than 100. Kone Cargotec’s personnel as of 30 June, 2004 totaled 6,600. Turnover in 2004 is anticipated to grow to EUR 1.5 billion.
Analyst and press meeting
KONE will hold an analyst and press meeting on Tuesday, 17 August, 2004 at 12:00 noon in the KONE Building, Keilasatama 3, Espoo. Material distributed at the session will be made available at the same time on the Internet at www.konecorp.com.
Board of Directors
Director & Secretary to the Board of Directors
Senior Vice President, Corporate Communications & IR
For further information, please contact:
Tapio Hakakari, Director & Secretary to the Board, tel. +358 (0)400 408 316