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."