What the KONE–TK Elevator Acquisition Means for Existing and Prospective Building Owners
The elevator industry is undergoing a significant shift that will directly impact building owners, operators, and anyone responsible for vertical transportation (VT) systems.
As this transition unfolds, for the ongoing health of the VT systems in your building, it is important to understand: What is changing? Why does it matter? And what should you be prepared for?
The Acquisition: What Has Happened
Announced on April 29th, the acquisition of TK Elevator (TKE) by KONE Elevator Company (KONE) merges the engineering and technical resources of two (2) of the world’s leading elevator and escalator manufacturers, creating the largest elevator company in the world.
Early announcements have focused on the commercial aspects of the acquisition, the creation of the world’s largest elevator manufacturer, and the potential pricing pressure that this may have on the other major elevator manufacturers throughout the world.
Expanded Technology and Product Access
From an R&D and technology standpoint the combined engineering resources of these two companies are significant and complementary.
Each manufacturer gains access to “singular” technologies particularly in the premium sector high rise elevator market.
These complementary product offerings means access to nearly double the number of vertical transportation solutions through a “single” manufacturer providing robust, resilient solutions for the most complex buildings worldwide.
What This Means for Existing Buildings
For modernization and adaptive reuse of “typical” existing buildings, Walker Consultants anticipates a significant degree of product “overlap” between KONE and TKE.
A couple of technical advantages to note:
- TKE will have access to KONE’s “Ultra Rope” Suspension Technology for high rise applications allowing for greater travel distances, reduced suspended hoist machine loads, reduced electrical loads, etc.
- For “underserved and underperforming” buildings, KONE will have access to TKE’s proven TWIN® Elevator Technology (uncoupled double deck technology) for improved efficiency and traffic handling, which can replace existing single deck elevators easier than retrofitting conventional double deck elevators.
In terms of each manufacturer’s standard quality product lines, Walker does not see any particular benefits of one manufacturer’s product over the other and we expect to see some product consolidation and/or phasing out of certain products over the next 18 to 24 months. This could negatively impact serviceability expediting “obsolescence” due to consumption of current parts inventories and accelerating modernization timelines.
Remaining service life of existing equipment will require additional attention to detail with respect to building portfolio acquisitions and disposals in conjunction with purchase and/or sales prices of real estate portfolio assets.
Anticipated Changes to Maintenance Agreements
Walker expects that the greatest amount of consolidation will happen to current preventive maintenance portfolios.
While specific consolidation plans have not yet been released, we expect clients will receive a new preventive maintenance agreement to be issued in about 10-12 months, as this merger is completed, that will include new terms with respect to equipment coverage, obsolescence, and commercial terms, etc.
For our clients whose current preventive maintenance agreement will expire prior to that, there may be a need to negotiate a temporary extension of your current maintenance agreement or develop a comprehensive maintenance agreement that protects your interests and provides continuity during this transition.
What You Should Be Thinking About Now
While many details are still emerging, this is an important moment to take a proactive approach:
- Review the status and expiration timeline of your current maintenance agreements
- Be prepared for changes to contract terms and service structures
- Consider how evolving product offerings may impact future modernization, capital planning decisions, and/or acquisition or disposal of real estate portfolio assets
Our Commitment to You
Walker Consultants is actively monitoring this situation and remains in communication with strategic leaders at both companies. As more information becomes available, we will continue to provide updates and guidance to help you navigate these changes with clarity.
This merger will reshape the elevator industry—but with the right insight and planning, it can also present opportunities to improve system performance and long-term value.
