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ChemChina Buys Germany’s KraussMaffei in China’s Largest Investment in Germany So Far
Source: China National Chemical Equipment Co., Ltd. Date: 2016-01-15

A deal that puts Industry 4.0 alongside with Made in China 2025

ChemChina announced on January 11 to buy KraussMaffei, a German maker of machinery to process rubber and plastic for 925 million euros (RMB 6.65 billion) from Onex, a Canadian private equity firm, so far the biggest Chinese investment in Germany.

KraussMaffei is a world leading machinery maker to process plastic and rubber and called “the Rolls-Royce” in the polymer machinery industry. Its service scope covers the whole process from injection molding, extrusion molding to the reactor technology, thus developing unique strength for the company.

ChemChina Chairman Ren Jianxin said, “By buying the world leaving plastic and rubber machinery maker with a history of 178 years old, China National Chemical Equipment (CNCE) will accelerate the integration of product portfolio and business and be a pioneer in achieving the ‘Made in China 2025’ Program. This is also a practice of the Belt and Road Initiative and international capacity cooperation.” Ren promised to keep the management and staff of KraussMaffei and “maintain the existing corporate structure.” KraussMaffei hires 4,500 employees worldwide, including 2,800 based in Germany.

ChemChina is a master hand at overseas merger & acquisition. Its official website data shows that it has successfully acquired eight industry-leading companies in France, Britain, Israel and Italy, including Pirelli, “the Prada in the tire industry.” In addition, ChemChina is rumored to buy Syngenta, a world leading agrochemical company in Switzerland, with “an offer that might reach RMB 300 billion.”

As to the actual acquisition process, from the announcement made by Tianhua Institute of Chemical Machinery & Automation Co., Ltd. (600579. SH), we know that on January 9, ChemChina, the actual controller of Tianhua Institute, and its subsidiary CNCE signed the Stock Purchase Agreement with Munich Holdings II Corporation S.à.r.l., a company controlled by Onex, via the project company ChemChina set up in Germany, to buy 100% of the stocks of KraussMaffei from Onex.

KraussMaffei, founded in 1838, owns three brands of rubber and plastic machinery and all-in-one solutions: KraussMaffei, KraussMaffeiBerstorff and Netstal. In 2014 KraussMaffei registered a business revenue of 1.1 billion euros. Through service programs under the brands of KraussMaffei, KraussMaffeiBerstorff and Netstal, it serves a wide range of clients, in particular those from automobile, packaging, medical and construction industries, as well as electric and electronic goods making and home appliance making industries. It’s been headquartered in Munich since its founding.

Frank Stieler, CEO of the KraussMaffei Group, said, “Over the years, we’ve maintained close communication and cooperation with ChemChina, a company with strategic and long-term vision. As part of it, we expert our growth to accelerate significantly, in particular in China and other parts of Asia, and continuous growth is also expected in Germany and other parts of Europe.”

In recent years, KraussMaffei has demonstrated robust growth. In 2014, its sales revenue stood at 1.11 billion euros and is expected to grow by 10% in 2015.

The transaction also involved Guoxin International Investment Group Ltd. and AGIC Capital. The latter defines itself as “the first global cross-border M&A fund focusing on Industry 4.0” on its official website.

But uncertainty still lingers as the acquisition needs to be reviewed and approved by anti-monopoly agencies and related supervisory agencies at home and abroad.

What deserves more words is Onex, another winner of the transaction, known as the most profitable private equity fund. According to Bloomberg, the company bought KraussMaffei for 276 million euros in 2012 and will make 670 million euros from the deal.

(Source: thepaper.cn)

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