Weichai Power and KION Group Successfully Close Transaction to Form
Long-term Strategic Partnership
WEIFANG, China, Dec. 28, 2012 /PRNewswire/ --
- Weichai Power has joined KKR and Goldman Sachs Capital
Partners as an anchor investor in KION with a 25% stake via capital
increase
- EUR 671 million shareholder
loan of KION converted into equity
- Weichai Power now the majority shareholder of Linde
Hydraulics
- Linde Material Handling GmbH completes carve-out of Linde
Hydraulics business and all 1,400 LHY employees agree to transfer
to the new entity
- Aschaffenburg-based Linde Hydraulics business to move into
new dedicated plant in 2015
- Supervisory board of KION to reflect new shareholder
structure
- With sound organization structure, Linde Hydraulics can
operate independently
Weichai Power Co., Ltd. ("Weichai Power"), KION Holding 1 GmbH
("KION") and their respective subsidiaries (together with KION the
"KION Group") and the shareholders of KION today successfully
closed and supplemented their strategic partnership, which was
first announced on 31 August 2012.
Weichai Power, a leading Chinese automotive and equipment
manufacturer and part of the Shandong Heavy Industry Group
("SHIG"), and KION Group, one of the world's leading manufacturers
of industrial trucks, intend to strengthen their industrial base in
the European markets, create additional opportunities for expansion
for their Asia-Pacific businesses
and build a platform for future joint growth.
Weichai Power, through its Luxembourg based subsidiary Weichai Power
(Luxembourg) Holding S.à.r.l.,
acquired a 25% stake in KION by way of a capital increase, making
it an anchor investor in KION Group alongside KKR and Goldman Sachs
Capital Partners. In addition, Weichai Power now holds a 70%
majority stake in Linde Hydraulics GmbH & Co. KG ("Linde
Hydraulics"), which comprises the carved-out former hydraulics
business activities of Linde Material Handling GmbH. The remaining
30% continue to be held by Linde Material Handling GmbH. In
addition to the existing call option enabling Weichai Power to
increase its shareholding in KION to 30% on a fully diluted basis
upon the completion of a potential future IPO, the parties agreed
to grant Weichai Power a further option to acquire an additional
3.3% stake in KION from the current shareholders until 30 June 2013 or within three months after
completion of a potential future IPO. If Weichai holds at least
33.3% of KION, the parties will support the election of a Weichai
Power representative to Chairman of the Supervisory Board of
KION.
For Weichai Power, venturing into the world's leading forklift
and high-end hydraulic fields has brought about clear improvements
to the structure of its corporate product division, as well as to
its upgrading of enterprise products. In addition, there is greater
rationalization of its corporate global strategic business
structure.
For KION Group, the strategic partnership with Weichai Power
provides additional access to key Asian growth markets as it will
leverage Weichai Power's strong local roots and relationships. KION
Group will also have access to a larger supplier base throughout
China and Europe.
Following the successful carve-out, the hydraulics business of
Linde is now being operated and managed by the independent company
Linde Hydraulics. Weichai Power holds 70% in Linde Hydraulics
through a subsidiary, while Linde Material Handling GmbH retains a
30% minority stake in the newly formed company. Linde Hydraulics
continues to market its products under the Linde trademark. The
existing Strategic Sales Agreement between Linde Hydraulics and
Eaton Corporation, which has been reasonably amended, remains in
place. Through its partnership with Weichai Power, Linde Hydraulics
will gain additional scale and will improve its ability to adapt in
a changing market environment and amid increasingly intensive
competition. Linde Hydraulics will leverage Weichai Power's
complementary products and technologies in an effort to exploit
untapped market potential, particularly in the growing Asia region.
Weichai Power has invested a total of EUR
738 million, including EUR 467
million paid in to acquire its 25% stake in KION through a
capital increase and EUR 271 million
paid to Linde Material Handling GmbH for its 70% majority stake in
Linde Hydraulics. Proceeds from this transaction will further
strengthen KION Group's capital structure. A large portion of the
proceeds will be used for repaying outstanding debt under KION
Group's senior facilities. In addition to the received cash
proceeds, an outstanding EUR 671 million shareholder loan
granted by the shareholders to KION that would have matured
in 2021 was converted into equity in connection with the
closing.
Tan Xuguang, Chairman and CEO of Weichai Power, said: "Our teams
have done a tremendous job in closing this transaction in a very
short timeframe, and have thus helped our strategic partnership get
off to an encouraging start. We will now make an immediate start to
implementing our common growth strategy in the area of hydraulics.
The new Aschaffenburg-based Linde Hydraulics plant is set to start
operations in 2015. Also, teams from Linde Hydraulics and Weichai
Power have already started to explore a wide range of applications
for Linde Hydraulics technologies in Weichai Power products. Our
options to increase our overall shareholding in KION up to 33.3%
demonstrate our strong commitment to the common goals of KION Group
and Weichai Power."
Gordon Riske, CEO of KION Group,
said: "The closing of this long-term strategic partnership is a
milestone in our strategy to continuously expand our forklift truck
business in the growing Asian and Chinese markets. Moreover, the
additional enhancement of our capital structure provides exciting
opportunities with which we can build on our growth strategy. Our
teams have successfully completed all of the more than 3,000 action
items in less than four months. This is a considerable achievement
which highlights our exceptional execution capabilities and spirit
that the two partners share."
Johannes Huth, Member & Head
of KKR Europe, and Alexander
Dibelius, Head of Goldman Sachs Germany, Austria and Central and Eastern Europe, added: "We very much look
forward to the additional growth opportunities this partnership
brings to KION to continue its highly successful development trend
over the past years. This strategic partnership is part of our
strategy to further enhance KION Group's global business presence
so as to exploit the vast market opportunities in markets outside
Europe."
The long-term strategic partnership between Weichai Power and
KION Group will also be reflected in the governance structure of
KION and Linde Hydraulics.
Jiang Kui, President of Shandong
Heavy Industry Group and Director of Weichai Power, will join the
Supervisory Board of KION, which will continue to be led by
Chairman John Feldmann. Jiang will
succeed Michael Süß, member of the executive board of Siemens AG,
who will leave the KION Supervisory Board. All other members of the
Supervisory Board of KION will retain their current positions.
The Supervisory Board of the newly established Linde Hydraulics
will consist of Jiang Kui
(Chairman), Sun Shaojun and Jeffrey
Chen, all of whom were nominated by Weichai Power, as well
as Theodor Maurer, who was nominated
by Linde Material Handling, and who will ensure full continuity in
the business relationship between Linde Hydraulics and Linde
Material Handling as one of the continued key customers of Linde
Hydraulics. The respective employee representatives have yet to be
nominated.
Jörg Ulrich (Speaker of the Management Board and Head of Finance
and Administration, age 42), Steffen
Appel (Head of Operations, age 45), and Thorsten Van der Tuuk (Head of Products and
Markets, age 56) have been appointed to the Management Board of
Linde Hydraulics.
About Weichai Power
Weichai Power Co., Ltd. (2338HK/000338SZ) is a leading
automotive and equipment manufacturing group in China. It operates in three main business
segments: power assembly (including engines, gear boxes and axles),
commercial vehicles, and automobile electronics and parts,
encompassing one of the most comprehensive product ranges in the
industry. Weichai Power has the highest sales volume globally in
high-speed heavy-duty engines and heavy-duty gearboxes. Its spark
plug products enjoy the largest market share in China, and its heavy-duty axle products are
considered a top brand in China.
The company also ranks No. 4 in heavy duty trucks in China. The company was listed on Hong Kong
Stock Exchange in 2004 and on Shenzhen Stock Exchange in 2007. 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.
About Shandong Heavy Industry Group
Shandong Heavy Industry Group is one of the most comprehensive
leading industrial equipment manufacturers in China, with two complete industrial chains of
the highest quality commercial vehicles and construction machinery.
The Group has four listed subsidiaries, including Weichai Power
(2338HK/000338SZ), Weichai Heavy Machinery (000880SZ), Yaxing Motor
Coach (600213SH), and Shantui Construction Machinery (000680SZ),
which is the largest bulldozer producer in the world. In 2011, the
Group generated revenue of RMB 122.5
billion (about USD 19.4
billion or EUR 15.4 billion)
and a profit of RMB 8.6 billion
(about USD 1.4 billion or
EUR 1.1 billion), with 60,000
employees worldwide.
About KION Group
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 non-domestic
supplier in China. The Linde and
STILL brands serve the premium segment worldwide. Fenwick is the
largest supplier of material handling products in France, while OM STILL is a market leader in
Italy. The Baoli brand focuses on
the economy segment, and Voltas is one of the two market leaders in
India. In 2011, KION Group
employed roughly 22,000 people and generated revenue of around
EUR 4.4 billion.
Disclaimer Weichai Power
This press release contains forward-looking statements involving
known and unknown risks, uncertainties and other factors, many of
which are outside the control of the Weichai Power Co., Ltd.
("Weichai Power"), are difficult to predict and may cause future
developments to differ significantly from assumed developments as
expressed or implied in the forward-looking statements in this
press release. Any liability (including in respect of direct,
indirect or consequential loss or damage) of any member of Weichai
Power with a view to the information contained in this press
release is expressly disclaimed. This press release does not
purport to contain all of the information that may be required to
evaluate any proposed transaction, and any recipient hereof should
seek its own legal, accounting and other relevant professional
advice. No member of Weichai Power undertakes any obligation or
expects to update or revise this press release, including
forward-looking statements or any other information contained
herein, whether as a result of new information, future events or
otherwise.
Disclaimer KION Group
This press release contains forward-looking statements involving
known and unknown risks, uncertainties and other factors, many of
which are outside the control of KION Group ("KION"), are difficult
to predict and may cause future developments to differ
significantly from assumed developments as expressed or implied in
the forward-looking statements in this press release. Any liability
(including in respect of direct, indirect or consequential loss or
damage) of any member of KION with a view to the information
contained in this press release is expressly disclaimed. This press
release does not purport to contain all of the information that may
be required to evaluate any proposed transaction, and any recipient
hereof should seek its own legal, accounting and other relevant
professional advice. No member of KION is under any obligation or
expectation to update or revise this press release, including
forward-looking statements or any other information contained
herein, whether as a result of new information, future events or
otherwise.