HELSINKI, Finland: Finnish elevator maker Kone has agreed to acquire Germany's TK Elevator in a US$34 billion deal that would reshape the global lift industry and create the world's largest manufacturer by market value.

The transaction, valued at 29.4 billion euros, comes as elevator companies seek new growth opportunities beyond China, where a prolonged property downturn has dampened demand. The combined entity would surpass U.S.-based Otis and strengthen its presence in North America, where TK Elevator has a significant foothold.

"We need more growing companies in the global top tier," Finnish Prime Minister Petteri Orpo said on X.

The deal, struck with TK Elevator's private equity owners Advent International and Cinven, ranks among Europe's largest buyouts and the biggest sell-side private equity transaction on record in the region, according to LSEG data.

The merged company would employ more than 100,000 people and generate annual sales exceeding 20 billion euros. Kone expects the deal to deliver about 700 million euros in annual cost savings, driven by efficiencies in maintenance and modernization services, the most profitable parts of the business.

The move also expands Kone's geographic reach. While the Finnish company has strong operations in Europe and Asia, TK Elevator derives about a third of its revenue from North America, offering a complementary footprint.

Markets reacted cautiously. Kone shares fell five percent to their lowest level since August, while Thyssenkrupp, which retains a 16.2 percent stake in TK Elevator, saw its shares rise nearly nine percent.

Analysts highlighted potential risks. RBC warned that the integration process could overshadow Kone's near-term performance. "In a nutshell, we worry that the Kone equity case, industry-leading growth, strong sales execution, and healthy margin expansion, will now, for the next two years or more, be subsumed by the TKE deal," the bank said in a note.

Regulatory scrutiny is expected, with antitrust authorities likely to examine the deal closely given the market's already concentrated nature. The company said completion could take 12 to 18 months. Swiss rival Schindler has already indicated it will challenge the merger.

Despite that, Kone remains confident it can secure approval, noting that a break-up fee would apply if the deal is rejected.

The acquisition will be financed through a mix of cash, new shares, and debt. Kone will pay 5 billion euros in cash at closing and issue about 270 million new shares valued at roughly 15.2 billion euros. It will also assume around 9.2 billion euros of TK Elevator's debt, which it plans to refinance.

Ownership of the new shares will be held by a holding company backed by Advent, Cinven, Thyssenkrupp, and other investors. Kone chairman Antti Herlin is set to invest about 1 billion euros in additional shares, maintaining majority voting control.

The deal has been years in the making. Kone previously attempted to acquire the business six years ago but withdrew due to antitrust concerns. In 2020, Thyssenkrupp sold TK Elevator to its current private equity owners for $18.7 billion.