Germany's MAN said yesterday it had bought a stake of 25 per cent plus one share in Sinotruk (Hong Kong) for HK$6.05 billion in a deal that will enable the Shandong truck maker to upgrade manufacturing. The German engineering firm, the third-largest in the world, is paying a 21 per cent premium to Sinotruk's average share price over the past 60 days, said a joint statement by MAN and Sinotruk yesterday. Sinotruk has been suspended from trading since June 29. The stock last traded at HK$7.51 and resumes trading today. The company said about 70 per cent of the net proceeds would be spent on upgrading manufacturing facilities, building new production lines and using MAN's TGA licensed technology, which include truck, engine, chassis and axle technology. The rest would be used for general working capital. 'We believe this deal will help enhance our core competitive strength as we integrate MAN's wide-ranging research and development ... [as well as] absorb their advanced technology in heavy-duty trucks and engines,' said Sinotruk chairman Ma Chunji. Under the long-term strategic agreement, Sinotruk and MAN will co-operate on the production and sale of technologically upgraded trucks and engines that comply with Euro III, IV and V emission standards. Both parties have agreed to co-operate in a global sales network to distribute heavy-duty trucks. The central government is urging truck makers to catch up with the international emission standards. Heavy trucks are upgrading to meet the national IV, or Euro IV, emission standards. European nations are complying with the Euro V or Euro VI emission standards at present. In the agreed co-operation, MAN has the right to nominate four directors, out of 17, to the board of Sinotruk. One of them will be the executive director responsible for the joint projects and the other three will be non-executive directors. 'The long-term agreement has been carefully structured to enable Sinotruk to localise production of cutting-edge technologies and launch a new product series in domestic and export markets, strongly aligning both parties' interests,' said MAN vice-president Andreas Lampersbach. Before MAN and Sinotruk extended their relationship, both had a technological tie-up for the past 25 years. Sinotruk, one of the largest vehicle makers on the mainland, said earlier its sales volume in the first half dropped 1.4 per cent year on year to about 60,000 units. 'We forecast net profit to decline 42 per cent to 447 million yuan [HK$507.08 million] [in the period] due to low selling prices and high dealer [bonuses],' said analyst Hou Yankun at Nomura. China sold about 266,000 heavy-duty trucks last month, down from 380,000 units in June last year but an increase of about 21 per cent on a month-on-month basis.