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Chinese group buys 25% stake in Kion Group

12 December 2012

Weichai Power and Kion Group will form a long-term strategic partnership, after the Chinese firm invests €738 million. The Kion Group owns forklift brands Linde and Still, among others.

Chinese automotive and equipment manufacturing group 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, 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 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. In the event of a potential future IPO of Kion, Weichai Power has the option to increase its stake in Kion to 30 percent. Furthermore, Weichai has the right to further increase its stake in Kion's hydraulics business.



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.



Key points
• Weichai Power to join KKR and Goldman Sachs Capital Partners as further anchor investor in Kion with a 25 percent stake; KKR and Goldman Sachs Capital Partners will retain existing stakes in Kion.
• Weichai Power to acquire 70 percent in Kion's hydraulics business.
• Weichai Power will bring a total investment of EUR 738 million.
• Compelling strategic rationale with a focus on creating a leading global industrial partnership.
• Partnership strengthens industrial base in European markets, creates additional expansion opportunities for Asia-Pacific business, builds platform for joint future growth.
• Aschaffenburg hydraulics business to move into a new dedicated plant.
• Long-term strategic collaboration between Kion and Weichai Power.
 
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