KONE Oyj: 1.8 Million Units of Recurring Service, and a EUR 29.4bn Bet on Scale

Voting dilution is much smaller. Each A share carries one vote while ten B shares together carry one vote. Before the transaction the theoretical vote count is about 121.53 million; 270 million new B shares add only 27 million votes. The seller receives roughly 18.2% of theoretical post-issue votes, consistent with KONE's published 18.3% figure after adjusting for treasury shares, even though it receives about one-third of the economics. Antti Herlin currently controls more than 60% of KONE's votes, and KONE states he will remain above 50% after closing.

That puts the deal closer to a merger with asymmetric control than to a conventional cash acquisition. The seller rolls a very large economic stake into KONE, receives two board nominees and one co-vice-chair position, yet the Herlin family keeps ultimate voting control. Security Trading Oy, controlled by Antti Herlin, has also agreed to buy EUR 1bn of the consideration shares from the seller immediately after closing at the preceding ten-day VWAP. The seller's board nomination rights step down when its holding falls below 15% and disappear below 10%.

The largest bull argument is tangible, not thematic. TKE already generated EUR 1.365bn of adjusted EBIT on EUR 9.23bn of FY2024/25 sales, an adjusted EBIT margin of 14.8%, while Service and Modernization were 65% of revenue. TKE is already a profitable, aftermarket-heavy competitor that improved adjusted EBIT 13% on an FX-adjusted basis in its latest fiscal year, rather than an asset that needs EUR 700m of synergy to become viable. The synergies sit on top of substantial pre-existing earnings.

The bear case begins with the price of those earnings and the uncertainty of retaining them. The headline EUR 29.4bn enterprise value is about 21.5 times TKE's EUR 1.365bn adjusted EBIT and about 18.2 times adjusted EBITDA before synergies. Full EUR 700m synergies would compress the EV/(TKE EBIT plus synergies) ratio to roughly 14.2 times. The acquisition economics require a meaningful part of the synergy case to be real, durable and not given back through remedies, customer losses, wage inflation or competitive response. KONE estimates one-off synergy implementation costs at approximately 1.0–1.2 times the annual synergy run rate, or roughly EUR 700–840m before tax, concentrated over the first two years.

Antitrust deserves more weight than shareholder politics. Schindler CEO Paolo Compagna said in March 2026, before the combination was announced, that his company was ready to oppose such a deal before antitrust authorities in every country where it could be reviewed, and Schindler has maintained that opposition since. Schindler is also preparing to recruit employees, capture customers and potentially buy assets that regulators force KONE/TKE to sell. KONE CFO Ilkka Hara has already told Reuters that remedy divestments in some geographies are part of the company's planning. The historical precedent is uncomfortable: KONE explored acquiring thyssenkrupp's elevator business in 2019–20 but antitrust concerns were significant, and KONE eventually withdrew from that process.

My central regulatory assumption is an 80% probability that the transaction ultimately closes and a 20% probability of block, abandonment or remedies severe enough that the economics no longer justify proceeding. Within the completion probability, I assign only about 15 percentage points to a light-remedy outcome, approximately 50 points to moderate structural divestitures and 15 points to heavy remedies. Those percentages are my research estimates, not guidance. The reasoning is that management itself expects some divestitures; the overlap combines two of the global majors; service competition is local and therefore potentially fixable by geographic portfolio sales; and the purchase agreement adjusts consideration for regulator-forced divestitures, giving KONE a mechanism to continue with a smaller asset perimeter rather than face an all-or-nothing decision.

The standalone business has to carry the investment case through that review period. It currently does. The 2026 outlook remains 3–6% comparable-currency sales growth and a 12.3–13.0% adjusted EBIT margin. Service, modernization, an enlarged order book and cost measures support the outlook; China new-building weakness and wage inflation are the principal negatives. At June 30, the order book was EUR 9.63bn, up 12.3% year on year.

There is one warning in those otherwise strong orders. Q2 comparable orders rose 10.9%, but KONE said the margin of orders received declined slightly year on year. China explains part of the tension: new-building unit orders were only slightly lower, while their monetary value fell by more than 10%, evidence of severe local price pressure. Major projects and modernization also contributed disproportionately to order growth. Outside China, KONE described new-building pricing as broadly stable and aftermarket pricing as favorable. That makes “KONE is buying market share everywhere” too strong a conclusion. The evidence fits a combination of China pricing, project mix and inflation/pricing lags better. But a second or third consecutive quarter of falling order margins would become a leading warning for 2027–28 sales margins, because today's booked work becomes tomorrow's revenue.

KONE's stock fell after the July 22 results even though orders beat expectations because revenue and adjusted EBIT fell slightly short of consensus. The July 21 close was EUR 48.20 and July 22 closed at EUR 46.72, a decline of about 3.1%. It has since recovered to EUR 51.40. That reaction is a useful picture of the current market: investors will pay for order growth only when it carries credible future margin.

The qualitative portrait is “company in transition.” KONE still has the ingredients that historically justified a premium valuation: a sticky installed base, recurring aftermarket revenue, high returns on capital, substantial cash conversion and decades of product/service expertise. The proposed TKE combination could deepen every one of those advantages. It also introduces leverage, dilution, integration complexity, seller overhang and the largest antitrust process KONE has ever faced. That transition, rather than Chinese elevator volume alone, is now the main capital-market narrative.

Vertical history and financial review

KONE's history has repeatedly been a story of narrowing the business when scale became unwieldy, then expanding again once a sharper economic engine had emerged. That pattern matters because the TKE transaction is the largest test yet of whether the company can repeat the trick without destroying the economics that made KONE valuable.

KONE began in Helsinki in 1910 from a machine repair shop called Tarmo. The first business refurbished and sold used Strömberg electric motors and imported and installed Graham Brothers elevators from Sweden. By 1918 KONE was making elevators from its own components. The Herlin family's control began in 1924, when Strömberg was in financial distress and businessman Harald Herlin bought the profitable KONE subsidiary. The company started as a small engineering and installation operation and became a family-controlled industrial company well before public listing.

Its early response to weak domestic elevator demand was diversification. During the 1930s it added industrial cranes and increased vertical integration into motors. That instinct eventually produced a sprawling industrial conglomerate. By the late 1980s KONE was a top-three player in elevators and escalators, and also in cranes, wood handling and shipboard cargo systems. Management itself now describes that complexity as increasingly difficult to run.

Public-market history began when trading in KONE class B shares started on the Helsinki Stock Exchange on January 2, 1967. Archival primary materials confirm the 1967 listing and the continuing A/B dual-class structure. I could not verify an authoritative 1967 offer price or amount of capital raised from the primary archival sources available for this report, so I do not supply one. The listing did not displace family control; it created a permanent architecture in which public B-share capital coexists with disproportionately strong A-share voting rights.

The first major strategic phase after listing was globalization through acquisition. KONE had adopted an acquisition-led internationalization strategy in the 1960s. By 1994 it bought Montgomery Elevator, then the fourth-largest U.S. elevator business, while preparing a bigger move into China and India. Geographic reach replaced conglomerate breadth as the dominant growth logic.

The decisive product turn came in the 1990s. KONE acknowledges that it had fallen behind competitors in technology and production cost across several businesses. Between 1993 and 1995 it divested everything except elevators and escalators. In 1996 it introduced MonoSpace, the world's first commercial machine-room-less elevator, using the compact EcoDisc hoisting machine inside the shaft. KONE says the architecture rapidly became an industry standard. The same year it completed ownership of German escalator company O&K Rolltreppen. This was a genuine fate-changing node: KONE exited industrial complexity, concentrated its R&D and then created a product architecture that reduced building-space requirements and energy consumption.

China was the second fate-changing decision. KONE opened a greenfield factory in Kunshan in 1998, before China became the world's largest new-equipment elevator market. The company later expanded the site into KONE Park with R&D and multiple factories, and eventually took full ownership of GiantKONE in 2016. The extraordinary construction cycle that followed supplied new units at a scale KONE could later convert into service contracts. The China success mixed good timing, management execution and a product suited to mass urban residential construction.

There was another period of corporate complexity around the 2002 acquisition of Partek, a Finnish industrial group larger than KONE at the time. Following Pekka Herlin's death in 2003, the Partek assets also provided a way to separate family holdings. In June 2005 KONE demerged into KONE and Cargotec, with Antti Herlin retaining principal ownership of the elevator company. The strategic consequence was again concentration: the listed KONE that investors effectively know today is a focused elevator, escalator, service and modernization company.

Matti Alahuhta became president in 2005 when KONE was profitable but, by its own account, behind the industry's best performers on important metrics. The combination of operating discipline, Chinese expansion and MonoSpace gave the next decade its shape. By 2010 KONE employed roughly 34,000 people and delivered around 60,000 elevators and escalators annually. Product development extended from the 2012 MonoSpace refresh to UltraRope carbon-fiber hoisting technology in 2013 and a broader push into building-access and people-flow software.

The next strategic turn was digital service. KONE brought R&D and IT together in a Technology & Innovation unit in 2015, partnered with IBM in 2016 to connect its maintenance base, launched a customizable KONE Care service package and 24/7 Connected Services in 2017, then created a broader digital platform in 2018. The commercial logic was more important than the technology branding: better remote diagnostics can raise technician productivity, reduce unplanned downtime and make the OEM relationship stickier after installation. By 2025 more than 40% of KONE's maintenance base was connected.

Henrik Ehrnrooth, CEO from 2014, presided over much of the China-to-aftermarket transition. Philippe Delorme took over as CEO in 2024 after a long career at Schneider Electric, where his roles covered strategy, technology, operations and regional management and where he served on the executive committee from 2009 to 2023. CFO Ilkka Hara has been with KONE since 2016 and previously held finance leadership roles at Microsoft Phones and Nokia. The leadership change came as the business needed to rely less on Chinese construction volume and more on service productivity, modernization and operational simplification.

The financial record shows why investors had come to regard KONE as a quality compounder and why 2022 was such a shock.

† 2023 operating cash flow shown rounded because KONE's 2024 CMD historical chart reports it at approximately EUR 1.1bn. ‡ Negative net debt denotes net cash. Sources: KONE annual reports and CMD.

The 2022 margin collapse from 12.5% to 9.9% shows the part of KONE that is still industrial and cyclical. Supply-chain friction, inflation and the Chinese property downturn hit new-equipment economics while working capital absorbed cash: operating cash flow fell to about EUR 0.53bn. The recovery since then has come without a meaningful return of Chinese new-building growth. Adjusted EBIT margin recovered to 12.2% by 2025 as pricing, mix and operating measures offset the weak construction market, while operating cash flow returned above EUR 1.3bn.

Across 2021–25, reported operating cash flow totals roughly EUR 5.8bn against approximately EUR 4.7bn of aggregate net income, an OCF/net-income ratio of about 1.23 times. The exact 2023 figure is rounded in that calculation, but the conclusion is insensitive to the rounding: over a full cycle KONE's earnings have converted to cash instead of relying on accruals. The 2022 exception was a working-capital event, and subsequent years reversed much of it.

The balance sheet historically magnified returns on capital in a healthy way. KONE operated with net cash and relatively little capital tied up in factories compared with the service revenues supported by its technician network and installed base. The company's CMD explicitly describes the business as having low capital-expenditure requirements. High ROE reflects both strong operating profitability and a capital-light/negative-working-capital model, not heavy financial leverage. That will cease to be true after TKE if the deal completes.

KONE's 2025 capex excluding acquisitions was EUR 378m, but cash capital expenditure in the cash-flow statement was only about EUR 154m; reported investment also includes categories such as leased assets, IT, connectivity devices, R&D tools and facilities. KONE does not disclose a maintenance-versus-growth capex split. My owner-earnings estimate assumes roughly 55–65% of the EUR 378m reported investment envelope, about EUR 210–245m, represents economically recurring maintenance/replacement spending. Against EUR 1.316bn operating cash flow, that yields roughly EUR 1.07–1.11bn of 2025 owner earnings. This assumption is deliberately more demanding than deducting cash capex alone.

At the current EUR 26.64bn equity value, that owner-earnings range implies a 4.0–4.2% yield and an owner-earnings multiple of roughly 24–25 times. On the same 2025 basis, the trailing accounting P/E is about 26.9 times, some 8–12% above that owner-earnings multiple; the roughly 28 times trailing figure quoted elsewhere in this report is a last-twelve-months multiple and is not directly comparable with a 2025 owner-earnings number. Because the divergence is modest rather than structural, I do not discard accounting earnings as a valuation tool; I use forward P/E, EV/EBIT and owner earnings together.

Capital-market valuation has moved through three broad regimes in the past decade. KONE traded as a premium growth/quality industrial when China growth and service compounding reinforced one another. Its year-end trailing P/E reached about 31 times in 2020 and remained around 28 times in 2021. The 2022 China/inflation shock did not immediately make the multiple cheap because earnings had fallen sharply. As earnings recovered in 2023–24, the year-end P/E compressed to roughly 23.5–24.7 times. Current trailing P/E is back near 28 times, while the forward multiple is lower because 2026–27 earnings are expected to rise.

Inderes' July 23 standalone estimates, published after Q2, put 2026 adjusted EPS at EUR 2.17 and 2027 at EUR 2.39, with adjusted EBIT margins of 12.5% and 13.1%. At today's EUR 51.40, that corresponds to about 23.7 times 2026 adjusted EPS and 21.5 times 2027 adjusted EPS. Inderes cites KONE's five-year median 12-month-forward P/E at about 24 times and EV/EBIT near 19 times. On that measure, KONE is around normal rather than distressed; the lower 2027 multiple depends on management continuing the margin recovery.

The historical lesson is straightforward. KONE has created value when it converts a cyclical equipment sale into a decades-long service relationship and has lost valuation support when investors start to doubt either the feeder market or the margin attached to that installed base. The TKE deal magnifies the same mechanism: it purchases another huge installed base, but pays for it with a combination of equity dilution and leverage that leaves far less room for execution error.

Business model moat industry and governance

The installed base is the core economic asset. KONE's roughly 1.8 million maintained units at the end of 2025 were up from more than 1.7 million a year earlier, helped by conversion of newly installed KONE equipment and bolt-on acquisitions. Annual maintenance retention is approximately 90%. KONE can also service competitors' equipment, so its addressable aftermarket is larger than its own historical deliveries.

A rough revenue-per-maintained-unit calculation shows the scale without pretending it is contract ARPU. Under KONE's 2026 presentation restatement, 2025 Service sales were about EUR 5.05bn. Dividing that by the year-end 1.8 million-unit base gives roughly EUR 2,800 per unit per year. The calculation mixes maintenance and repair revenue, uses a year-end rather than average unit count, so it should not be read as an average service-contract price. It is useful mainly to show why a few percentage points of retention or route productivity have meaningful economic consequences.

Conversion is less transparent. KONE's current reporting says a majority of delivered new units convert into maintenance, but it does not publish a current global percentage. Historical China materials showed roughly 50% conversion for KONE plus GiantKONE and around 60% for the KONE brand, but those 2014 figures should not be extrapolated mechanically to today's global portfolio. The dependable current figures are “more than half” conversion and approximately 90% annual retention, not a fabricated precise conversion rate.

The 2025 mix makes the annuity visible. On KONE's original 2025 disclosure, New Building Solutions was EUR 4.10bn, Service EUR 4.75bn and Modernization EUR 2.39bn. From 2026 KONE reclassified certain repair activities, giving 2025 comparative Service sales of approximately EUR 5.05bn and Modernization EUR 2.09bn; the combined aftermarket total is essentially unchanged at approximately 64% of group sales. That accounting-basis change matters when comparing individual Service and Modernization growth rates across documents, but it does not change the central mix-shift conclusion.

KONE does not report EBIT by New Building Solutions, Service and Modernization. A precise claim that service produces, for example, “62% of EBIT” would therefore be false precision. My operating model assumes aftermarket margins materially exceed new-equipment margins because maintenance uses recurring routes, local technician density and an installed customer relationship, while new installations bear project bidding, materials and construction-cycle volatility. With aftermarket representing about 64% of sales, a reasonable 16–19% aftermarket operating-margin band and a mid-single-digit new-equipment margin would put aftermarket at roughly 82–89% of operating profit before central-cost differences. Maintenance alone likely contributes more than half of group operating profit. This is a research estimate, not a reported segment result; TKE's 65% aftermarket mix and 14.8% group adjusted EBIT margin, plus Otis's service-led margin structure, provide directionally consistent peer evidence.

That service machine has three genuine moats.

First is local route density. An elevator has to work every day, failures often require fast physical response, and a technician can service more units economically when those units are clustered within a branch territory. Scale lowers travel time and lets spare parts, diagnostics and specialist expertise be shared across more contracts. The importance of density is indirectly visible in the TKE synergy plan itself: KONE names service-network density as a major source of the EUR 700m synergy opportunity.

Second is switching friction rather than absolute lock-in. Building owners can switch service providers, and KONE explicitly services third-party units, so there is no closed ecosystem comparable with proprietary enterprise software. Yet approximately 90% annual retention means the relationship is sticky in practice. Safety responsibility, maintenance records, installed parts, technician familiarity and the inconvenience of changing provider all favor incumbency. Digital connectivity can add diagnostic data and remote monitoring to that relationship.

Third is the equipment-to-service funnel. A new elevator has a low-margin competitive sale today but can seed decades of maintenance and later modernization. This is why a company can rationally compete aggressively for new equipment without treating its first-sale margin as the full lifetime economics. That logic has limits: if KONE pays away too much margin to win units and fails to convert them to service, the funnel destroys rather than creates value. The current order-margin decline matters precisely because the lifetime-value model can sometimes excuse price competition too easily. KONE's own current disclosure only says that a majority of delivered units convert to maintenance, leaving investors unable to verify lifetime economics order by order.

Product technology is a fourth moat, but a weaker one today than MonoSpace was in 1996. The machine-room-less architecture genuinely shifted industry design; modern digital monitoring, destination control and connected-building interfaces are now offered by all major OEMs. KONE still has a technology reputation built around MonoSpace, UltraRope, high-rise testing and connected service, yet present-day competitive advantage comes increasingly from using technology to make service routes more productive rather than owning a unique product category.

The cost structure reinforces that conclusion. New Building Solutions contains a larger variable component from equipment, components, freight, installation subcontracting and project execution. Service has a larger recurring labor burden: technician wages and local branch infrastructure are difficult to remove without damaging response time and retention. KONE can obtain operating leverage when the service portfolio expands faster than technician and branch costs, but wage inflation directly attacks that leverage. Management explicitly lists wage inflation among the 2026 profitability headwinds and says pricing and efficiency measures are intended to offset it.

Modernization sits between service and new construction. It is project revenue, but the opportunity originates in an installed asset whose age can be estimated and whose owner already faces reliability, energy-efficiency and safety needs. This gives the market a structural component. Otis estimates the global installed base of elevators ready for modernization could rise from roughly 9 million units at year-end 2025 to about 13 million by 2030. TK Elevator has cited about 22 million lifts globally, roughly 30% of them more than 20 years old. KONE, Schindler, Otis and TKE are all currently reporting strong modernization growth, which argues that the cycle is broader than a one-company promotion.

China adds a policy-assisted acceleration to that aging cycle. The Financial Times reported in 2026 that China had more than 12 million lifts, with over 1.1 million older than 15 years, and government subsidies of RMB 100,000–200,000 per unit were supporting replacements and upgrades. KONE expected annual Chinese modernization volumes to reach roughly 40,000–60,000 units by 2028. The subsidy can move some spending forward, but it cannot create the age of the installed equipment. I regard Chinese modernization as a durable multi-year structural opportunity with a timing boost from policy, rather than a pure subsidy pull-forward.

Published estimates of the global elevator/escalator market vary because some include different combinations of equipment, service and modernization. Two 2026 commercial estimates place it around US$102–108bn. KONE's April 29 conversion of the EUR 29.4bn TKE enterprise value into roughly US$34.4bn implies a rate of about US$1.17 per EUR. On that translation, the market is approximately EUR 87–92bn. The range is more useful than false precision. The underlying market is mature in Europe and North America, construction-sensitive in new equipment, and structurally growing in service and modernization as the global installed base expands and ages.

KONE's competitive ranking also varies by geography. Its investor materials place it at number two in European New Building Solutions, number four in North America, number one in APMEA and number two in Greater China by units; in Service it ranks number three in Europe, number four in North America and number two in APMEA and China. KONE describes North America as the least fragmented major region and China as the most fragmented. Those facts help explain the TKE rationale: TKE adds considerable scale in markets where KONE's local position is weaker, while regulatory risk rises for exactly the same reason.

The industry is an oligopoly at the global OEM level but often much more fragmented at local maintenance level. Otis, Schindler, KONE and TKE form the principal Western global group, while Mitsubishi Electric and Hitachi are significant Asian competitors and numerous regional/independent service firms compete for maintenance. New entry at global OEM scale is difficult because safety certification, product engineering, installation capability and branch networks take years to reproduce. Entry into local maintenance is easier, which keeps retention and technician productivity commercially important.

Governance has always carried a family-control discount or premium depending on the investor's perspective. Antti Herlin is chairman, and KONE's governance disclosures state that he controlled about 62% of votes and about 23% of economic shares at the end of 2025. Several Herlin family members sit on the board, while most other directors are independent. Stable control has allowed long-duration industrial investment, but B-shareholders cannot change control through normal market accumulation.

The TKE deal makes that asymmetry more complicated. At the maximum issuance, existing shareholders suffer 33.8% issued-basis economic dilution, while aggregate incumbent voting power falls only about 18.2%. The seller gets about one-third of the economics but around 18% of votes and two board nominees. Herlin retains more than half the votes despite much lower post-transaction economic ownership. This creates two large blocks whose interests are generally aligned on successful integration but not necessarily on capital returns, future asset sales or the speed of deleveraging.

† Assumes KONE's 11.11 million treasury B shares remain unchanged. ‡ One vote for each A share and one vote per ten B shares; KONE reports approximately 18.3% seller voting rights excluding treasury effects. Sources: KONE.

The business consequence is more important than the governance optics. KONE has historically been able to pay large dividends because it generated cash while holding net cash. Post-closing, deleveraging should rationally outrank aggressive buybacks or extraordinary distributions. If the board attempts to preserve the old capital-return pattern while also integrating TKE, minority investors should treat that as a warning rather than a benefit.

Horizontal peers and current fundamentals

The closest listed comparisons are Otis and Schindler. Mitsubishi Electric and Hitachi belong in the competitive map but are poor valuation comps because elevators are only part of larger industrial portfolios. TKE itself is operationally one of the best comparisons but is private. Fujitec is a smaller pure-play competitor, yet it is too small and regionally different to anchor KONE's valuation. The practical valuation set is KONE, Otis and Schindler, with TKE used for operating economics.

† Otis and Schindler valuation snapshot is from Inderes on 2026-07-23; KONE has been recomputed to the 2026-08-10 EUR 51.40 close using the same standalone earnings estimate. Operating figures come from company disclosures.

Otis became the purest listed service flywheel after its 2020 separation from United Technologies. It ended 2025 with approximately 2.5 million units under maintenance, up 4% for a fourth consecutive year, a book larger than KONE's current portfolio. Otis reported 5% organic Service growth in 2025 and 43% constant-currency modernization-order growth in Q4. Its market narrative centers on harvesting the industry's largest installed service book while using modernization as a second aftermarket growth curve.

Otis also shows why service quality cannot be reduced to “recurring equals safe.” In July 2026 it cut its adjusted EPS outlook because of labor and productivity pressures even though Service remained strong; new-equipment weakness in China continued. Its share price fell around 2% on that update. That is directly relevant to KONE because wage inflation is also one of KONE's named 2026 headwinds. A service business may be recurrent, but it remains labor-intensive.

Customers pick Otis chiefly for the density and breadth of that maintenance network, its large installed base and global product/service coverage. Economically, Otis is what KONE would like the combined KONE/TKE aftermarket engine to resemble at greater scale. Post-combination KONE's illustrative 3.2 million-unit portfolio would exceed Otis's approximately 2.5 million-unit current portfolio, though regulators may reduce that figure and integration must still preserve customer retention.

Schindler has become the margin-discipline benchmark. In H1 2026, local-currency orders grew 2.9% and revenue 1.4%; adjusted EBIT margin reached 13.5%, up from 12.8%, with management attributing improvement to operating efficiency, mix and pricing. Modernization grew strongly and Service continued steady growth while China remained the weak region. KONE's H1 adjusted EBIT margin was 11.8%, so Schindler currently has approximately 170 basis points of margin advantage at group level.

Schindler may also be the largest tactical beneficiary of KONE/TKE disruption. Its CEO has publicly promised to challenge the deal, and management has said the long integration period creates opportunities to recruit employees, win customers and buy regulatory divestitures. The threat is commercially real. Service quality depends on local technicians and customer relationships; losing experienced technicians during a merger can damage both retention and productivity before accounting synergies arrive.

TKE entered the deal from a stronger operating position than a typical private-equity exit. FY2024/25 sales grew 2% FX-adjusted to EUR 9.2bn, Service grew 5%, Modernization 11%, adjusted EBITDA rose 12% to about EUR 1.6bn and adjusted EBIT rose 13% to about EUR 1.4bn. The EOX new-installation platform generated more than 50% order growth despite weakness in China. The seller is monetizing a business whose margins have improved substantially since the 2020 private-equity acquisition, not disposing of a turnaround that has failed.

TKE's weakness is its capital structure. KONE's transaction materials show approximately EUR 9.2bn of adjusted TKE net debt. That debt is one reason an equity-heavy combination is rational: paying an all-cash premium for TKE while refinancing its leverage would be much harder for KONE to finance without destroying its balance sheet. The seller instead rolls into 270 million KONE shares and remains a major shareholder.

KONE's niche before the deal can be summarized as a technologically credible global OEM with particularly strong positions in APMEA and China, a smaller service book than Otis, and a high-quality but not industry-leading current margin. Post-deal it would become the industry's largest maintenance platform by unit count on the companies' illustrative figures, with a stronger North American and European footprint. The same geographic complementarity that improves the strategic position produces the antitrust problem.

The latest fundamentals support the standalone thesis but contain two tensions. In Q2 2026 orders grew 10.9% and sales 3.4% at comparable FX, while adjusted EBIT rose 6.5% as reported, taking the margin to 12.6% from 12.2%. H1 orders were up 7.4% comparably, sales 5.0%, and adjusted EBIT margin reached 11.8% versus 11.3%. The H1 order book rose 12.3% to EUR 9.63bn.

The first tension is growth versus order quality. Q2 order margin declined slightly. Modernization orders were up by more than 10% across the group and large projects contributed strongly, but China new-building order value fell much faster than units. KONE says China new-equipment pricing remains intensely competitive, while new-equipment pricing elsewhere is broadly stable and Service/Modernization pricing is favorable. That evidence points to a company with enough low-margin China exposure and large-project mix for a 10.9% order-growth headline to overstate the quality of that growth, rather than to a global price war led by KONE.

Inderes reacted by cutting its 2026 standalone adjusted EBIT-margin estimate from 12.7% to 12.5% and its 2027 estimate from 13.3% to 13.1%, explicitly citing the slightly lower order margin, inflation and business mix. That reduction is small, but it answers the question of whether the order-margin line is economically relevant: at least one local analyst immediately translated it into lower forward margins rather than dismissing it.

The second tension is adjusted versus reported earnings. Q2 adjusted EBIT increased to EUR 369.9m, but reported EBIT fell to EUR 322.2m from EUR 338.0m. For H1, reported EBIT fell 1.5% even as adjusted EBIT increased. The gap includes restructuring and transformation-type adjustments. That distinction becomes much more important after TKE because integration expenses and purchase-price amortization can make adjusted accretion coexist with reported EPS dilution for several years.

The broader four-quarter direction is better than the Q2 share-price reaction suggests. Full-year 2025 adjusted EBIT margin reached 12.2%, its third consecutive annual improvement. Q4 comparable orders grew 12.2% and order margin was stable year over year. Q1 2026 comparable orders grew 3.9%; by Q2 growth accelerated to 10.9%. The deterioration in order margin is new, not a long-running trend. It deserves monitoring, not an assumption that the entire order book has already become structurally low-margin.

The market is primarily trading the TKE outcome now. Inderes wrote after Q2 that standalone earnings-based valuation was no longer the principal share-price driver and that the focus had shifted to the TKE arrangement. That assessment fits the evidence: KONE's standalone estimates barely changed after Q2, while the stock's principal uncertainty is whether 270 million shares and a large debt refinancing buy a durable EUR 700m synergy stream or an integration problem.

The bull/bear disagreement can be framed with unusually specific numbers. Bulls see a standalone company likely to earn around EUR 2.17 adjusted EPS in 2026 and EUR 2.39 in 2027, plus the possibility of adding TKE's EUR 1.365bn adjusted EBIT and EUR 700m synergies. Bears see a company issuing up to 270 million shares, moving from EUR 0.7bn net cash to around EUR 13.5bn illustrative net debt, paying a pre-synergy 21.5 times adjusted EBIT for an asset that regulators may partly dismantle. Both sides are looking at the same arithmetic.

Valuation deal math and risk

Dilution comes first because every other transaction valuation rests on the denominator.

On the latest disclosed share structure, maximum issuance raises economic shares from 518.28 million outstanding ex treasury to approximately 788.28 million, a 52.1% increase in the economically outstanding denominator. For EPS merely to remain unchanged, post-deal net income needs to rise by approximately 52.1% relative to standalone net income. Using Inderes' 2027 standalone net-income estimate of EUR 1.225bn, TKE plus synergies must contribute about EUR 638m of post-tax incremental earnings for EPS neutrality.

TKE's own earnings can get surprisingly close. The difficulty is that KONE discloses TKE adjusted EBIT of EUR 1.365bn and reported operating income of EUR 920m, rather than an audited stand-alone net-income number suitable for direct EPS consolidation. I model from EBIT instead. My base financing assumption is a 4.0% all-in cash interest cost on the illustrative EUR 13.49bn post-deal net debt, approximately EUR 540m pretax, and a 25% cash tax rate. These are modelling assumptions, not KONE guidance.

Under those assumptions, TKE's EUR 1.365bn adjusted EBIT less EUR 540m financing cost yields about EUR 619m after tax before any synergy. EPS neutrality against the forward 2027 KONE earnings base requires about EUR 638m, leaving a gap of only EUR 19m after tax. A pretax synergy contribution of roughly EUR 26m, less than 4% of the EUR 700m target, closes it. On an adjusted basis, TKE's existing operating earnings almost cover the maximum dilution before synergies arrive.

The reported-income picture is much less generous. Starting with TKE's EUR 920m operating income rather than adjusted EBIT leaves about EUR 285m after the same financing and tax assumptions. To reach the EUR 638m neutrality hurdle requires roughly EUR 471m of pretax synergy, about 67% of the stated EUR 700m run rate. That points to reported EPS neutrality around the latter part of the synergy ramp rather than immediately. New KONE purchase-price accounting could increase amortization further, and KONE expects EUR 700–840m of one-off synergy implementation costs over the first two years, so IFRS EPS can look materially worse than adjusted EPS during integration.

I use a deliberately simple synergy phase: 25% of run rate in the first full post-close year, 60% in the second and 100% in the third. KONE only guides full P&L realization by the end of year three, not this exact intermediate schedule. I keep TKE EBIT flat in the table rather than assuming organic growth, which isolates the effect of dilution and synergy delivery.

† Starts with TKE EUR 1.365bn adjusted EBIT and assumes EUR 540m financing cost, 25% tax and 788.28m post-deal shares. ‡ Starts with TKE EUR 920m reported operating income under the same financing/tax assumptions; excludes any additional new KONE acquisition PPA and excludes explicit integration costs, making early reported EPS potentially too optimistic. KONE inputs are from primary transaction disclosures; standalone earnings estimates use Inderes' post-Q2 model.

The direct answer on dilution coverage is yes: TKE's own adjusted earnings plus even a modest fraction of the EUR 700m synergies should more than cover maximum economic dilution. On reported earnings, the crossover is later, probably around years two to three, and can slip further if PPA amortization, integration spending or financing costs are worse than assumed.

A 4.5% financing rate would add roughly EUR 67m of annual pretax interest relative to the base model. Adjusted EPS would still likely be accretive with first-year synergies, but the reported-basis synergy requirement rises. Financing spreads matter; synergy execution and retained TKE EBIT matter more.

The risk of divestitures means “EUR 700m” should not be valued at face value. KONE identifies route density, procurement, R&D/platforms and SG&A as sources of synergy. Divesting local service portfolios does two things at once: it removes the EBIT associated with the sold contracts and weakens route-density synergy in the affected geography. The transaction agreement adjusts consideration for regulatory divestitures, which mitigates the purchase-price effect, but it cannot fully compensate for strategic density that disappears.

My antitrust event tree runs as follows. These probabilities are analytical judgments.

The middle case produces a company smaller than KONE's headline illustration but still much larger than standalone KONE: roughly EUR 19.6–20.0bn of sales, approximately EUR 2.60–2.67bn of pre-synergy adjusted EBIT and around 3.1 million maintenance units would be a reasonable order-of-magnitude outcome if regulators remove 5–10% of the acquired business. These are scenario assumptions, not management forecasts. The original baseline is EUR 20.5bn sales, more than EUR 2.7bn adjusted EBIT and approximately 3.2 million maintained units.

Outright failure gets only 20% because KONE has already accepted that some divestments may be necessary, the agreement allows consideration adjustment for forced divestitures, shareholder authorization is complete, and service markets can often be remedied geographically rather than only through a global prohibition. It stays as high as 20% because Schindler is actively challenging the transaction, the combination joins two top global competitors, the previous KONE effort to acquire thyssenkrupp's elevator business ran into serious antitrust concerns, and a 12–18 month review itself signals complexity.

Standalone valuation provides the floor only if standalone fundamentals stay intact. At EUR 51.40, KONE trades around 23.7 times Inderes' 2026 adjusted EPS estimate and 21.5 times 2027. Inderes' standalone DCF after Q2 was just under EUR 53 per share. Its cited five-year median forward P/E is approximately 24 times. There is no evidence of a deep standalone discount at EUR 51.40; this is a roughly normal quality-company valuation with deal optionality layered on top.

Peer valuation offers some support but should not be mistaken for absolute cheapness. On Inderes' July 23 snapshot, Schindler was around 14 times 2027 EV/EBIT and Otis around 13 times. Re-marking KONE's July estimates to EUR 51.40 puts it around 15.8 times 2027 EV/EBIT, a premium to both. That premium can be justified by KONE's expected margin recovery and TKE optionality, but it means peer comparison is not a strong “cheap” signal.

Historical comparison is similarly neutral. Current trailing P/E around 28 times sits slightly above the roughly 26.5 times seven-year average reported by Macrotrends, while the forward multiple is near KONE's five-year median because earnings are expected to grow. Investors are paying neither the 2020 peak quality multiple nor a distressed China multiple.

For absolute valuation I use a four-year terminal framework to approximately 2030, because that captures regulatory completion, most of the three-year synergy ramp and some deleveraging. The conservative scenario assumes the transaction fails or creates little value and KONE reaches only EUR 2.4 of sustainable EPS, with a EUR 56 terminal price. The base assumes moderate remedies, around EUR 500–625m sustainable synergies, adjusted EPS around EUR 3.2 and a EUR 72 terminal value. The optimistic case approximates clean execution, near-full synergy realization and EUR 3.7 sustainable EPS, supporting EUR 90. I use an 8% required equity return for today's fair-value conversion and a roughly EUR 1.80 annual dividend. The terminal multiples are about 23 times, 22.5 times and 24 times earnings respectively; they remain near KONE's historical quality range rather than assuming a speculative re-rating.

For comparison, Inderes' much more transaction-positive simplified model estimates around EUR 4.4bn adjusted EBIT by 2030, EUR 10.7bn net debt and EUR 75.5–92.2 per share at 16–19 times EV/EBIT. Inderes explicitly says the calculation does not incorporate still-unknown divestitures. My base case sits below the midpoint of that range.

† 8% discount rate and EUR 1.80 annual dividend assumption. ‡ Terminal value plus four years of EUR 1.80 dividends, before tax. This is valuation-scenario analysis within a research framework, not investment advice. Inputs incorporate KONE/TKE disclosures and the research assumptions described above.

The conservative fair value of approximately EUR 47 sits below today's EUR 51.40. The current price carries no margin of safety against the conservative scenario. The base case's most fragile assumption is synergy realization after regulatory remedies, not KONE's standalone Service growth. Reducing the EUR 700m headline synergy to 70%, or EUR 490m, places the deal near the low end of my moderate-remedy case and takes the base today-equivalent value from around EUR 59 toward roughly EUR 54–56, depending on divestiture proceeds and financing. Current price would then offer only a mid-to-high-single-digit valuation cushion.

The flat-earnings test is harsher. Suppose KONE's share price is unchanged three years from now, EPS does not grow and the EUR 1.80 dividend is simply maintained. Three years of dividends produce an annualized total return of about 3.4%. Finland's ten-year government-bond yield was approximately 3.50% on August 10. Measured against that bond yield, there is no margin of safety at this buy price in a flat-earnings case.

Margin-of-safety sufficiency verdict: none.

The problem is the price rather than the business. EUR 51.40 already requires either continued standalone earnings growth or some transaction value creation to beat a government bond by a sufficiently attractive spread. A quality company can still be a mediocre purchase if the expected return depends on a difficult merger.

Permanent-loss risk concentrates in five channels.

Antitrust has medium probability and high impact. The observable indicators are whether authorities move into extended reviews, the scale and geography of remedy packages, and whether KONE starts describing consideration adjustments large enough to change the strategic logic. Moderate remedies can still preserve value; a forced sale of high-quality service portfolios removes recurring EBIT and route density simultaneously. Schindler's public challenge and willingness to acquire divested assets make this more than a legal-process risk.

Integration and leverage have medium probability and very high impact. Closing moves KONE from net cash to roughly EUR 13.5bn illustrative net debt, about four times pre-synergy combined EBITDA. If integration consumes cash while synergies lag, the equity becomes much more sensitive to interest rates and the operating cycle. The observable indicator is post-close net debt/EBITDA. Failure to fall below roughly 3.5 times within the first two years would make my base case materially less credible.

China new-equipment pricing has high probability but medium group impact today. KONE is already seeing China new-building monetary orders fall much faster than units, while China represents 19% of 2025 group sales rather than 23% a year earlier. Another leg down in price would hit new-equipment margins first and future service conversion second. The business mix is becoming less China-dependent, which limits the damage, but order-margin deterioration shows that the problem has not vanished.

Service labor and retention risk has medium probability and high long-term impact. Wage inflation is already an identified headwind. During TKE integration, Schindler and Otis have an incentive to recruit technicians and approach customers. A drop in KONE's approximately 90% retention rate to the mid-80s would damage the core thesis because service density deteriorates nonlinearly: fewer contracts spread branch and technician costs over a smaller route.

Governance and seller overhang have medium probability and medium impact. Vertical Topco's maximum 270 million shares would represent roughly one-third of post-deal issued equity. The seller has a 180-day lock-up after delivery except for the EUR 1bn sale to Security Trading. After that period, even orderly monetization can create a persistent technical supply overhang. Herlin control reduces takeover optionality and means public B holders cannot force a different capital-allocation path.

The principal positive catalysts are regulatory clearances with manageable divestitures, a disclosed financing package below the interest cost assumed here, renewed stability in order margin, continued high-single/double-digit modernization growth and evidence that Service pricing fully offsets wages. The strongest negative catalysts are a Phase II-style antitrust escalation with large structural remedies, another quarter of falling order margin, 2026 margin guidance moving below 12.3%, or a post-close leverage trajectory that fails to decline.

The tracking dashboard focuses on numbers investors can actually observe rather than invented KPIs.

† Pre-synergy illustrative ratio using KONE/TKE 2025 adjusted EBITDA and transaction net debt. Sources: KONE, analyst estimates and investor calendar.

The most important dashboard item may be one KONE does not quantify: order margin. Investors should track management's wording quarter by quarter. “Stable” or improving order margin with mid/high-single-digit order growth would validate 2027 margin expansion. Another two quarters of “slightly lower” margin while orders remain strong would imply that some of today's volume is being purchased with tomorrow's profitability.

Cross-synthesis and final conclusion

Vertically, KONE has proven one capability more convincingly than any other: it can turn equipment engineering into a long-lived local service franchise. The evidence spans the 1990s strategic refocus, MonoSpace, the China build-out, digital service and the current 1.8-million-unit installed base. The company's best decisions went beyond invention: they created or acquired installed equipment, built local density around it and then monetized that density through maintenance and modernization.

Past success was partly an era tailwind. China became the world's largest new-equipment market just after KONE built Kunshan capacity, and urbanization supplied extraordinary unit growth. But the company did more than ride the cycle: it reached number-two new-building and service positions in China, converted its global business toward aftermarket revenue and restored margins after China's property cycle turned down. A company dependent only on the old Chinese construction boom would not be producing record or near-record cash flows while Chinese new equipment remains under pressure.

Horizontally, KONE's advantage over peers is a more balanced combination of product technology, significant emerging-market positions and a rapidly rising aftermarket mix, rather than the highest margins: Schindler's H1 adjusted EBIT margin is better, and Otis has the larger current maintenance portfolio. TKE would turn scale itself into the new advantage by pushing the service portfolio from 1.8 million to approximately 3.2 million units before remedies.

That acquisition also threatens the historical reason KONE deserved a premium. The old KONE carried net cash and could tolerate a cyclical setback. Combined KONE begins with about EUR 13.5bn illustrative net debt. The old KONE could focus operational attention on service conversion, pricing and product development. Combined KONE must simultaneously integrate more than 50,000 TKE employees, defend customers and technicians against competitors, satisfy multiple regulators, refinance debt and harvest synergies. TKE had more than 50,000 employees and more than 1.4 million units under maintenance when the deal was announced.

The market is probably misjudging two things in opposite directions.

The bullish mispricing is that many investors instinctively treat 270 million new shares as dilution that must be “earned back” almost entirely by EUR 700m of synergy. The forward arithmetic does not support that. TKE's EUR 1.365bn adjusted EBIT already nearly covers the incremental share denominator after reasonable financing and taxes. Under my model, only a few percent of the synergy target is needed for adjusted EPS neutrality against a 2027 standalone KONE base; a 25% first-year synergy capture produces roughly 6% adjusted accretion. TKE's own earnings matter at least as much as the synergy number.

The bearish mispricing runs the other way: adjusted EPS accretion can create a false sense that the transaction is economically safe. Reported TKE operating income is EUR 445m below its adjusted EBIT; integration costs are expected to be EUR 700–840m; leverage jumps above four times pre-synergy EBITDA; and regulators can remove precisely the dense service portfolios that generate the best synergies. My reported-basis EPS bridge remains dilutive through roughly the second full year and only turns slightly accretive in year three before allowing for new purchase-price amortization.

That is the central investment distinction. Accounting-adjusted accretion is plausible quickly. Economic value creation requires retained customers, real cash synergy, deleveraging and sensible remedies.

Over the next year, the share should trade principally on regulatory information, order quality and financing expectations. KONE is likely to spend much of the period as a standalone business because the earliest possible closing is Q2 2027. If Service and Modernization continue mid/high-single-digit growth and adjusted EBIT margin remains within the 12.3–13.0% guidance range, standalone earnings can support the stock while investors wait.

At three years, the questions change. Either the deal has failed and KONE should again be valued primarily on its 1.8-million-plus installed base and standalone margin path, or the combined company should have captured most of the planned synergy. A combined company still above roughly 3.5 times net debt/EBITDA three years after closing, with synergies below EUR 500m, would be a failed base-case execution even if management continued to report adjusted EPS accretion.

At five years, the decisive variable is whether service density rather than acquisition accounting has improved. The attractive end state is a roughly three-million-unit aftermarket network, rising modernization penetration, lower leverage and an EBIT margin structurally above today's KONE level. The unattractive end state is a fragmented post-remedy perimeter with duplicated systems, technician churn and a seller still distributing a large equity stake into the market.

The investment becomes materially better under one of two conditions. The first is price: in the high EUR 30s, investors receive close to a 20% discount to my conservative present value and no longer need a successful TKE combination to justify an adequate expected return. The second is information: a credible remedy package that preserves the majority of service density, financing at around or below a 4% all-in cost, and evidence of EUR 500m-plus sustainable synergies would justify paying closer to the base fair-value range.

The thesis should be overturned in the bearish direction if KONE's standalone service retention drops below the high-80s, order margin keeps deteriorating while order growth remains strong, the 2027 standalone EBIT-margin path falls materially below 13%, regulators require more than roughly 15% of the TKE earnings perimeter to be sold, or post-close leverage fails to decline. Those events would attack the underlying economics rather than merely move the share price.

Bull reasons:

• KONE's approximately 1.8 million-unit maintenance base retains around 90% of contracts annually, and Service plus Modernization already represents about 64% of sales, reducing dependence on Chinese construction.
• TKE contributes EUR 1.365bn of existing adjusted EBIT and a 65% aftermarket mix before any of KONE's EUR 700m synergy target, making maximum-share dilution much easier to cover than a synergy-only analysis suggests.
• Modernization growth is industry-wide and supported by an aging global installed base; Otis expects modernization-ready units to rise from about 9 million to 13 million by 2030.
• KONE has restored adjusted EBIT margin from 9.9% in 2022 to 12.2% in 2025 despite continued China weakness, evidence that the aftermarket shift is already changing earnings resilience.
• At the current price, KONE's 2027 standalone adjusted P/E is roughly 21.5 times versus a cited five-year forward median around 24 times, leaving some earnings-growth upside without requiring a multiple expansion.

Bear reasons:

• Maximum issuance causes 33.8% issued-basis economic dilution and pushes economically outstanding shares up about 52%, while the transaction also moves KONE from net cash to roughly EUR 13.5bn illustrative net debt.
• The EUR 29.4bn acquisition price equals about 21.5 times TKE's adjusted EBIT before synergies, so failure to realize a large fraction of synergies would make the purchase expensive.
• Q2 order growth of 10.9% came with a slightly lower order margin, and analysts already trimmed 2026–27 margin assumptions in response.
• Schindler intends to challenge the transaction, poach customers and employees and potentially acquire divested assets, creating a direct commercial loss path during a long regulatory/integration window.
• EUR 51.40 stands above my conservative present value and a flat-earnings/dividend return of about 3.4% is slightly below Finland's 3.50% ten-year government-bond yield, leaving no conservative margin of safety.

Pre-mortem. The most plausible path to a 50% loss starts in 2027 with regulators requiring sales of high-density service portfolios in Germany, the United States or other overlapping markets. Schindler and Otis use the extended integration to hire technicians and approach customers. KONE's maintenance retention falls from about 90% toward 85%, realized synergies stall near EUR 300–350m rather than EUR 700m, and net debt remains above EUR 12bn in 2029. Adjusted EPS ends up closer to EUR 2.0 than my EUR 3.2 base case. A market that once valued KONE around 24 times forward earnings assigns 13–15 times because it now sees a leveraged integration story; EUR 2.0 at 13 times is EUR 26, approximately half today's price. The inputs that make this script possible are observable before the full loss occurs: remedy scale, technician/customer retention, synergy run rate and leverage.

A second script is a late regulatory failure after KONE has already spent management attention and transaction costs, combined with another leg down in China and Europe. Standalone adjusted EBIT margin falls back toward 11.5%, EPS stalls around EUR 1.7–1.8, and investors decide the historical quality premium was partly compensation for a net-cash balance sheet that management was willing to risk. A 15–17 times multiple would put the share in the EUR 26–31 range. This script requires both an operating deterioration and a de-rating; deal failure by itself does not justify a 50% decline because the standalone service franchise still has value.

The final judgment is narrower than either the merger enthusiasm or the dilution fear. KONE remains a high-quality industrial business underneath the transaction: recurring aftermarket revenue is now the majority of sales, modernization has a durable aging-equipment runway, and cash conversion over a five-year period has exceeded accounting earnings. TKE is also a good operating asset. The combination can create value because TKE contributes substantial earnings before synergies and because service-density economics make scale valuable.

At EUR 51.40, however, the standalone business is roughly fairly valued rather than deeply cheap, and the conservative valuation sits below the share price. Investors are being offered TKE optionality without paying the full value of a successful combination, but they are also accepting a genuinely different balance sheet and a regulatory process that can reshape the asset before closing. For a balanced investor, the correct posture is to own or hold the quality already present rather than pay aggressively for the merger outcome. The price becomes clearly more compelling around EUR 36–38, where the valuation no longer needs success from the transaction to satisfy a conservative margin-of-safety discipline.

Company-profile scores

• Fundamental quality: high
• Growth: medium
• Moat: strong
• Financial soundness: strong standalone; medium if TKE closes
• Management credibility: high
• Valuation attractiveness: medium
• Risk level: high while the TKE transaction is pending
• Suitable investor type: long-term growth and event-driven investors; less suitable for investors requiring low leverage and simple governance

Investment rating

• Rating: Hold
• One-line thesis: Service and modernization support standalone value, but EUR 51.40 offers no conservative margin of safety before TKE regulatory and leverage risks clear.
• Current-price classification: acceptable hold
• Whether to wait for a better price: yes. A new purchase becomes compelling around EUR 36–38 without requiring merger success; alternatively, clearer remedies and financing could justify paying within the base band.
• Target holding horizon: 3–5 years
• Expected annualized return: approximately 5.3% conservative, 11.4% base and 17.3% optimistic over roughly four years, including assumed dividends.
• Max-loss risk: about 40–50% in a failed-integration/large-remedy scenario in which EPS falls near EUR 2 and the P/E compresses to the low-to-mid teens.
• Reassessment triggers: sustained maintenance retention below 87%; two further quarters of declining order margin alongside strong order volume; standalone adjusted EBIT margin trajectory below about 12%–12.5%; forced divestitures exceeding roughly 15% of the acquired earnings perimeter; or post-close net debt/EBITDA remaining above 3.5 times two years after closing.

【Ideal Buy Price】36–38 EUR Basis: a roughly 20% margin below the approximately EUR 47 value implied by the conservative scenario (23% at EUR 36, 19% at EUR 38).

【Valuation Range】

• current: 51.40 EUR (close as of 2026-08-10)
• bear (conservative · ideal buy zone): [36, 38]
• base (fair · acceptable hold zone): [50, 64]
• bull (optimistic · above the clearly-overvalued line): [80, 88]

Research uncertainties remain material. KONE has not disclosed TKE net income in a form that permits a clean pro-forma EPS bridge, so the analysis derives earnings from disclosed EBIT with explicit interest and tax assumptions. No detailed regulator remedy package was public by the base date. KONE does not disclose business-line EBIT, a numeric order margin, a current precise global new-equipment-to-service conversion rate, or maintenance capex separately; the profit-pool and owner-earnings estimates use ranges. The final number of new B shares can also be below the 270 million authorization if remedy-driven consideration adjustments alter the transaction perimeter.

Selected primary sources for this research include KONE's 2025 Annual Review and financial statements, its January–June 2026 half-year report, share-capital and shareholder disclosures, the April 29 TKE transaction announcement and supporting materials, and the June 3 EGM decisions. TKE's FY2024/25 results provide the main target-company operating evidence; Otis's 2025 reporting and Schindler's H1 2026 interim report provide the principal peer evidence. Reuters reporting supplies the principal external evidence on competitor antitrust challenges, expected divestitures and the market response, while the Financial Times provides evidence on the global aging installed base and Chinese modernization policy. Inderes' July 23 report is used as a dated independent estimate and valuation cross-check, not as a substitute for company disclosures.

Other tickers mentioned

• OTIS.US — closest listed pure-play peer, with the industry's largest currently disclosed maintenance portfolio and a service-heavy earnings model.
• SCHP.SW — closest European listed peer and current margin benchmark, as well as a likely commercial beneficiary of KONE/TKE remedies and integration disruption.
• 6503.TSE — Mitsubishi Electric is a major Asian elevator competitor but a less useful valuation peer because elevators sit inside a diversified industrial group.
• 6501.TSE — Hitachi competes in elevators, particularly in Asia, but its broader industrial and digital portfolio makes it a secondary valuation reference.

This report is based on public information and does not constitute investment advice. Markets carry risk; invest with caution.