Weichai Power buys Kion stakes
Chinese automotive and equipment manufacturing company Weichai Power Co Ltd said on Monday that it will pay 738 million euros ($928 million) for a stake in German forklift truck maker Kion Group GmbH and its hydraulics subsidiary, the largest direct investment by a Chinese company in Germany so far.
According to the agreement signed by the two sides on Monday, Weichai Power, which is headquartered in Weifang, Shandong province, and is part of the Shandong Heavy Industry Group, will acquire a 25 percent stake in Kion Group, the world's second-largest forklift maker, for 467 million euros, and a 70 percent controlling stake in Kion's subsidiary Linde Hydraulics for 271 million euros, from KKR & Co and Goldman Sachs Group Inc.
"This partnership is an important step in our five-year strategy to globalize and expand our business activities into new markets and products," said Tan Xuguang, board chairman of Weichai Power.
The company acquired 130-year-old French diesel engine and gearbox maker Moteurs Baudouin in 2008, and purchased a 75 percent stake in Italy's Ferretti Group, one of the top builders of luxury yachts in the world, in January.
Analysts said that hydraulics control systems are a bottleneck technology for China's booming equipment manufacturing industry, the largest in the world, which relies heavily on imports, especially in the high-end sector. China's hydraulics control systems imports totaled 30 billion yuan ($4.7 billion) in 2011, and are increasing this year.
The investment in Kion Group will be a shortcut for Weichai Power to master world-leading high-end hydraulics technology and apply it to many industries such as engineering and agricultural machinery, yachts, aviation and aerospace, said analysts.
"Owning Kion's advanced technology will also help Weichai Power support the upgrading and restructuring of China's engineering equipment industry," said Tan.
Kion Group is the world's second-largest and Europe's biggest forklift truck maker, with a global market share of 15 percent. It has 12 forklift manufacturing facilities around the world, and its sales network extends to more than 100 countries.
In 2011, Kion reported annual revenue of 4.37 billion euros, with a worldwide forklift capacity of 1.12 million units.
Germany has been a major target in recent years for Chinese companies seeking global expansion through mergers and acquisitions.
Sany Heavy Industry Co Ltd, a leading Chinese manufacturer of construction machinery, spent 8.1 million euros to fully take over Intermix GmbH, a German truck mixer maker from its founder Hans-George Stetter through its subsidiary Putzmeister, a German concrete machinery manufacturer, in July.
The acquisition will expand Putzmeister's product portfolio, extend its industry chain and improve its cooperation with Sany's existing business, the Changsha-based company said.
In August, privately owned automaker China Youngman Automobile Group Co, headquartered in Jinhua, Zhejiang province, said that it had received provincial government approval to purchase a major stake in Germany's Viseon Bus GmbH for 10 million euros, after its failed bid for Saab last year.
Earlier this year, Hebei-based automotive supplier Lingyun Industrial Group Corp and two other Chinese companies signed an agreement to acquire 100 percent of German car-lock maker Kiekert AG, a move intended to strengthen Lingyun's technological capabilities and position it for global growth.
According to a survey conducted by consulting firm Ernst & Young in June, among 400 executives of medium-sized and large Chinese firms from different industries, Germany is their most attractive investment destination in Europe.
Among Chinese companies which plan to invest in Germany, 9 percent said they preferred joint ventures, while 56 percent would opt for mergers and acquisitions.
The survey said that 57 percent of the companies were interested in investing in the mechanical engineering industry, with the automobile sector taking second place.
"German companies and brands are regarded highly in China, which shapes the image of Germany as an investment location from the perspective of Chinese companies," said Yi Sun, a partner at Ernst & Young and head of China business services in Germany, Austria and Switzerland.
"This partnership is an important step in our five-year strategy to globalize and expand our business activities into new markets and products," said Tan Xuguang, board chairman of Weichai Power.
The company acquired 130-year-old French diesel engine and gearbox maker Moteurs Baudouin in 2008, and purchased a 75 percent stake in Italy's Ferretti Group, one of the top builders of luxury yachts in the world, in January.
Analysts said that hydraulics control systems are a bottleneck technology for China's booming equipment manufacturing industry, the largest in the world, which relies heavily on imports, especially in the high-end sector. China's hydraulics control systems imports totaled 30 billion yuan ($4.7 billion) in 2011, and are increasing this year.
The investment in Kion Group will be a shortcut for Weichai Power to master world-leading high-end hydraulics technology and apply it to many industries such as engineering and agricultural machinery, yachts, aviation and aerospace, said analysts.
"Owning Kion's advanced technology will also help Weichai Power support the upgrading and restructuring of China's engineering equipment industry," said Tan.
Kion Group is the world's second-largest and Europe's biggest forklift truck maker, with a global market share of 15 percent. It has 12 forklift manufacturing facilities around the world, and its sales network extends to more than 100 countries.
In 2011, Kion reported annual revenue of 4.37 billion euros, with a worldwide forklift capacity of 1.12 million units.
Germany has been a major target in recent years for Chinese companies seeking global expansion through mergers and acquisitions.
Sany Heavy Industry Co Ltd, a leading Chinese manufacturer of construction machinery, spent 8.1 million euros to fully take over Intermix GmbH, a German truck mixer maker from its founder Hans-George Stetter through its subsidiary Putzmeister, a German concrete machinery manufacturer, in July.
The acquisition will expand Putzmeister's product portfolio, extend its industry chain and improve its cooperation with Sany's existing business, the Changsha-based company said.
In August, privately owned automaker China Youngman Automobile Group Co, headquartered in Jinhua, Zhejiang province, said that it had received provincial government approval to purchase a major stake in Germany's Viseon Bus GmbH for 10 million euros, after its failed bid for Saab last year.
Earlier this year, Hebei-based automotive supplier Lingyun Industrial Group Corp and two other Chinese companies signed an agreement to acquire 100 percent of German car-lock maker Kiekert AG, a move intended to strengthen Lingyun's technological capabilities and position it for global growth.
According to a survey conducted by consulting firm Ernst & Young in June, among 400 executives of medium-sized and large Chinese firms from different industries, Germany is their most attractive investment destination in Europe.
Among Chinese companies which plan to invest in Germany, 9 percent said they preferred joint ventures, while 56 percent would opt for mergers and acquisitions.
The survey said that 57 percent of the companies were interested in investing in the mechanical engineering industry, with the automobile sector taking second place.
"German companies and brands are regarded highly in China, which shapes the image of Germany as an investment location from the perspective of Chinese companies," said Yi Sun, a partner at Ernst & Young and head of China business services in Germany, Austria and Switzerland.
