Weichai Power to invest in truck firm

PUBLISHED : Saturday, 01 September, 2012, 12:00am
UPDATED : Saturday, 01 September, 2012, 3:05am

Weichai Power, a mainland automotive and equipment manufacturer, will invest €738 million (HK$7.17 billion) in Kion Group, a German truck maker.

The agreement, which clears the way for the largest investment by the mainland in Germany to date, was signed yesterday in Wiesbaden, Germany, where Kion is headquartered, while German Chancellor Dr Angela Merkel is visiting China.

Weichai, listed in Hong Kong and Shenzhen, will be an anchor investor and strategic partner of Kion, co-operating in materials handling and hydraulic drive technology, said both firms in a statement.

Weichai will invest €467 million to acquire a 25 per cent stake in Kion; plus another €271 million for 70 per cent of Kion's hydraulics business.

If Kion lists on a stock exchange, Weichai has the option to increase its stake to 30 per cent. Kion chief executive Gordon Riske was quoted by Reuters saying his company hopes to go public between this year and 2015.

"This partnership is an important step in our five-year strategy to globalise and expand our business into new markets and products," said Weichai chairman Tan Xuguang. "We will ensure stability of employment and the production sites, as well as continuity in the management of Linde Hydraulics."

Riske described the strategic partnership as an important catalyst for Kion's future growth in Asia and China in particular. This applies to both the industrial trucks and the hydraulics businesses, which will benefit from Weichai Power's expertise, he said. The deal is expected to be completed by the fourth quarter this year, said the statement.

In 2006, KKR, a US private equity firm, and US bank Goldman Sachs acquired Kion from the Linde Group, a conglomerate listed in Germany, for US$4 billion.

Johannes Huth, Europe head of KKR, and Alexander Dibelius, head of Goldman Sachs in Germany, Austria and Central and Eastern Europe, welcomed Weichai as an additional investor in Kion.

In January, Weichai's state-owned parent, Shandong Heavy Industry Group, acquired the Ferretti Group, an Italian yachtmaker, for €374 million.