A deal to create what may become the world’s largest elevator company is aimed at giving the combining companies a chance to seize a bigger piece of a U.S. commercial property market with a growing number of outdated elevators facing replacement.
Kone agreed to buy TKE, formerly known as TK Elevator, for $34 billion, according to a statement from the companies. The deal is expected to be completed in the second quarter of 2027. Both companies are European, with Kone based in Espoo, Finland, and TKE headquartered in Düsseldorf, Germany.
The U.S. market is at top of mind for leaders at Kone in their effort to grow through the acquisition of TKE, also formerly known as ThyssenKrupp. Elevators have a typical lifespan of 25 years and at least a third of elevators in the U.S. are near or past the end of their lifecycle and should be replaced for efficiency or safety reasons, according to estimates from Schindler, a Swiss elevator maker that’s not involved in the Kone-TKE deal.
“Geographically, the combined group would be more balanced across regions with increased exposure to the attractive U.S. market. This creates more resilient profit pools supporting our long-term growth and profitability ambitions,” Ilkka Hara, chief financial officer at Kone, said in a call to discuss quarterly earnings.
Representatives from Kone and TKE contacted by CoStar News declined to comment.
Elevators require frequent service due to high usage. About 283 billion trips on elevators and escalators are taken each year in the U.S., traveling about 2.8 billion miles annually, according to the National Elevator Industry trade association.
In addition to the replacement of aging models, elevator makers are attracted to fast-growing cities like Austin, Texas, and the Raleigh-Durham, North Carolina, area where construction of new high-rises requires elevators. Building renovations and conversions also frequently include the installation of new elevators to replace aging units, according to elevator manufacturers.
Kone’s recent work in the U.S. includes new elevators at the renovation of Hotel Marcel in New Haven, Connecticut; at the Pecora, a 26-story residential tower under construction in Long Island City, New York; and at Bruckner Heights, a 9-story multifamily building in the Bronx, New York.
TKE has recently installed new elevator systems during the renovation of Bank of America Plaza in Atlanta and at Residences at 1428 Brickell, a 70-story tower under construction in Miami. TKE was also hired to provide elevators for the conversion of the Mirage to the Hard Rock Las Vegas hotel and casino.
Elevator companies also make escalators, systems considered in the industry to have relatively frequent breakdowns and maintenance requirements. Otis Worldwide was recently hired to repair, refurbish and replace 172 escalators in the London Underground transit system.
The global competitive landscape for elevators and escalators is crowded, with firms including Otis, Schindler, Mitsubishi Electric, Fujitec, Hitachi, Toshiba and Savaria. Executives at Kone and TKE said they expect to receive antitrust approval from regulators for their proposed combination.
TKE’s U.S. headquarters office is in Atlanta, where it operates a high-rise building with 18 elevator shafts for testing new models. Kone’s U.S. operations are based in Lisle, Illinois.