Going up: Kone Oyj plans to bid on Thyssenkrupp’s elevator division

Antitrust concerns loom as one of the big 4 elevator giants looks to further consolidate the industry


September 11, 2019

Matt McClain/The Washington Post via Getty Images

The Finnish elevator giant, Kone Oyj, has hired a law firm to advise it on a takeover bid for Thyssenkrupp AG’s elevator unit.

Thyssenkrupp could be worth as much as $19B, which means a merger would send Kone straight to the top floor of the market. 

More importantly, it would further consolidate the oligopoly that already exists in the industry.

The doors are closing…

In order of market share, Otis, Schindler, Kone Oyj, and Thyssenkrupp AG currently take up about 60% of the floors in the elevator biz.

It’s expensive to fix elevators. That, combined with tough service regulations, has been a natural repellent against new competitors since people first started “taking the elevator” a century ago.

About half of the big 4’s revenues are earned through repairs over new equipment sales. But, as the need for new elevators skyrockets in China — currently accounting for more than 60% of the world’s elevator installations — an acquisition of Thyssenkrup (which has a better foothold in China) could be the perfect opportunity for Kone to surpass its competitors.

Is a merger realistic? 

A decade ago, the big 4 were met with almost €1B in fines from the EU for running a price-fixing cartel in multiple countries — never a good platform to start on with antitrust regulators.

According to Bloomberg, a merger could equip Kone with more than $17.7B of sales.

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