31 August 2012

Weichai Power to invest €738 million in KION Group, Largest Chinese direct investment in Germany

Wiesbaden / Weifang - 31 August 2012 - Weichai Power Co., Ltd. and KION Group GmbH announced today that Weichai Power is to become a further anchor investor and strategic partner of KION. Core of the strategic partnership is a close cooperation in the field of material handling and hydraulic drive technology. The agreement between Weichai Power, a leading Chinese automotive and equipment manufacturing group and part of the Shandong Heavy Industry Group, and KION, one of the world's leading manufacturers of industrial trucks and a global leader in hydraulic technology, was signed today in Wiesbaden, Germany. The partnership is a landmark transaction as it is the largest Chinese direct investment in Germany to date. 

Under the terms of the agreement, Weichai Power will invest a total of EUR 738 million: EUR 467 million to acquire a 25 percent stake in KION via a capital increase and EUR 271 million for a 70 percent majority stake in KION's hydraulics business. KION will use the proceeds to further strengthen its capital structure. Affiliates of KKR and Goldman Sachs Capital Partners will retain their existing investment in KION and will not receive any proceeds from this transaction, and 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. Linde's hydraulics products will continue to be branded under the Linde Hydraulics trademark. Partnering with Weichai Power, Linde Hydraulics will gain improved scale and be even better positioned to adapt to a changing market environment and increasing competition. With complementary products and technologies from Weichai Power, Linde Hydraulics will be in a position to gain scale and take full advantage of untapped market potential, particularly in the growing Asian region. The business plan for Linde Hydraulics includes relocating the existing hydraulics activities in Nilkheim, Aschaffenburg, to a new hydraulics plant nearby and increasing capacity at other hydraulics production sites.

Weichai Power has complete confidence in KION and its management teams to lead and develop the business going forward. Under the agreement, Weichai Power has emphasized that it will honour all existing collective labor agreements, bargaining agreements and co-determination. This will ensure the long-term job security of all employees of Linde Hydraulics worldwide. In addition to the planned new production site in Aschaffenburg, Linde Hydraulics intends to expand its activities in China in order to better meet the growing demand from Chinese and Asian customers. 

Weichai Power Co., Ltd. (2338HK/000338SZ) is a leading automotive and equipment manufacturing group in China. In 2011, Weichai Power generated revenue of RMB 60 billion (about USD 9.5 billion or EUR 7.5 billion) and a net profit of RMB 5.6 billion (about USD 900 million or EUR 700 million). At the end of 2011, Weichai Power has approximately 42,000 employees globally.

The KION Group - comprising the six brands Linde, STILL, Fenwick, OM STILL, Baoli and Voltas - is Europe's market leader in industrial trucks, the global number two in the industry and the leading international supplier in China. In 2011, the KION Group employed roughly 22,000 people and generated revenue of around €4.4 billion.

Source: KION Group