WUHU, Anhui – Chinese construction equipment maker Zoomlion Heavy Industry Science & Technology Co., Ltd. (Zoomlion) and private equity firm Hony Capital, backed by Legend Holdings, jointly acquired Chery Heavy Industry Co., Ltd., according to a joint press release from the three companies on August 20.
Zoomlion spent ¥2.088 billion ($348 million) in acquiring 60 percent stake in the agricultural machinery and construction machinery subsidiary of Chery Group, while Hony Capital gets 20 percent stake for ¥696 million.
“We are optimistic about the growth potential of the farm machinery segment, and we’ve worked with Zoomlion before,” said Cindy Chen, managing director of Hony Capital.
The acquisition marks a business extension of Zoomlion into agricultural machinery market.
Zoomlion, seeking to profit from Chinese government’s drive to promote large-scale rural modernization, said the move could help propel the company to “become a leading agricultural machinery enterprise in China.”
Over the past three years, the company has explored deals outside the construction machinery segment, including commercial vehicle partnerships and the acquisition of manufacturers that make street-cleaning machines, Zoomlion chairman Zhan Chunxin said. It completed the acquisition of Dutch hoisting machinery company Raxtar on August 8.
Chery Heavy Industry’s sales revenues in 2013 reached ¥3.86 billion, with total assets of ¥8.7 billion.
In 2013, Zoomlion’s operating income fell nearly 20 percent to reach ¥38.5 billion, while net profits dropped 47 percent to ¥3.8 billion.