Weichai Power, an automotive and equipment manufacturing company under Shandong Heavy Industry Group this week agreed to acquire a one-quarter ownership stake in German forklift truck manufacturer Kion Group. The transaction, valued at €738 million (about U.S. $922 million) was signed in Jinan, China, and marked the largest direct investment in a German firm by a Chinese company.
Kion Group is the world’s second-largest forklift manufacturer and holds 15 percent of the global market share of the business, according to Chinese online reports. The purchase is also expected to offer debt-refinancing relief to Kion. Weichai Power will invest €467 million to acquire a 25-percent share of Kion Group and an additional €271 million for a 70-percent ownership stake in Kion’s hydraulics business.
Tan Xuguang, chairman of the board of SHIG and CEO of Weichai Power said the deal will result in a significant change in the world’s hydraulics industry. Tan also announced recently that Weichai Power recently concluded the acquisition and strategic restructuring of Italian manufacturer Ferreti Group.
Affiliates of KKR and Goldman Sachs Capital Partners will retain their existing investments in Kion and will not receive proceeds from the transaction, and said they will continue their full support of Kion.
The hydraulics business will be operated and managed as an independent company named Linde Hydraulics, with Kion retaining a strategic stake in the company.
“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. “With this partnership, we will leverage Kion’s strong position and utilize growth opportunities for Kion and Weichai Power to further enhance the competitive edge of both companies.”
Shandong Heavy Industry Group is a China-based industrial manufacturer of commercial vehicles, construction machinery, power systems, auto parts and yachts. Weichai Power is based in Weifang, Shandong province.
Germany has been a major target in recent years for Chinese companies seeking global expansion through mergers and acquisitions, such as Sany Heavy Industry’s recent €8.1 million acquisition of concrete pump maker Putzmeister.