HELSINKI - U.S. cranes and mining equipment maker Terex and Finnish rival Konecranes have agreed an all-share merger, hoping a combined $10 billion in annual revenues will help them better cope with cooling Chinese and weak European demand. Terex shareholders will own 60 percent of the enlarged company, to be called Konecranes Terex, with Konecranes’ investors owning the rest, the companies said on Tuesday. Analysts said the tie-up should produce cost savings, cross-selling opportunities and help both firms in the face of weak industrial investment and growing competition. “It seems to make a lot of sense,” said Nordea’s Kristian Tammela. “The whole sector is very fragmented and it is now challenged by weakness in China and Europe ... Both companies will win when synergies materialise and (product) offerings expand.” Konecranes shares leapt as much as 25 percent to a record high of 34.98 euros. Terex makes cranes and equipment for miners and builders, while Konecranes is more focused on cranes for factories, shipyards and ports. Terex’s rivals include U.S. group Caterpillar and Finland’s Metso, while Konecranes’ more specialist competitors include Japan’s Kito, China’s ZPMC and U.S. firm Columbus McKinnon. Based on Monday’s closing prices, a tie-up between the two would have a market capitalisation of $4.3 billion. Nordea’s Tammela said the market values of the companies prior to the deal suggested an ownership split of 55 percent for Terex and 45 percent for Konecranes, but he also noted Terex shares had suffered recently from its exposure to a sharp slowdown in the mining industry. In terms of sales and earnings before interest and tax (EBIT), Terex was contributing around three quarters to the enlarged company, he added. CHALLENGING Terex chief executive Ron DeFeo said the deal would create a stronger business able to tackle industry headwinds. “The current environment is challenging, there’s no doubt about that. Muted global growth trends have led to uncertainty in many of our end markets, with weakness across key commodities, energy, and a depressed market for non-residential construction,” he told reporters. Konecranes Terex will be incorporated in Finland, with headquarters in Hyvinkaa, Finland and Westport, Connecticut. The transaction is structured in such a way that Terex shareholders will get 0.80 Konecranes shares for each existing Terex share. The firms expect the deal to close in early 2016 and generate annual net income benefits of $119 million within three years. After closure, they plan to buy back up to $1.5 billion of stock. “The synergy goals look rather ambitious, and not much is said about where they will come. Europe has been weak for the cranemakers, so maybe they will start with that,” said Pohjola analyst Pekka Spolander. He added the enlarged company might look to sell its mining equipment business in future. Perella Weinberg Partners is the financial adviser to Konecranes and Credit Suisse Securities to Terex. (Editing by Jason Neely and Mark Potter)