Sector News

ChemChina agrees to acquire Germany’s KraussMaffei in $1 billion deal

January 11, 2016
Energy & Chemical Value Chain

A consortium of investors including China National Chemical Corp. agreed to buy KraussMaffei Group for 925 million euros ($1 billion) including debt in what could be the largest Chinese takeover of a German company ever.

China National Chemical Corp., known as ChemChina, has been an aggressive overseas acquirer in recent years. Last year, it agreed to a roughly $7.7 billion deal to buy Italian tire maker Pirelli & C. SpA and is nearing shareholder approval to complete that deal.

The acquisition of KraussMaffei, a maker of equipment that processes plastics and rubber, would rank as the biggest outbound investment from China into Germany, according to data provider Dealogic. The largest Chinese acquisition of a German company to date was the $694 million acquisition of Putzmeister Holding, a maker of high-tech concrete pumps, by Chinese construction-equipment company Sany Heavy Industry Co. in 2012.

The group of investors acquiring KraussMaffei includes private-equity firm AGIC Capital and Chinese state fund Guoxin International Investment Corp., according to a statement from AGIC Capital. KraussMaffei‘s current owner is Canadian private-equity firm Onex Corp., which acquired the business in 2012 for €568 million.

The deal is expected to close in the first half of the year, Onex said Monday in a statement.

The deal is the first for AGIC Capital, a new private-equity fund established by former Deutsche Bank Group AG banker Henry Cai. The fund is raising $1 billion to buy businesses in German-speaking countries with the aim of growing their China business by joining up with local Chinese industrial companies who can use their technology.

KraussMaffei’s developments in new materials such as carbon fibers stand to benefit from China’s objective to advance its industry toward high-end manufacturing, said Wolfgang Seibold, AGIC’s head of Germany.

Mr. Cai set up AGIC in early 2014 after serving as executive chairman of corporate finance for Asia-Pacific at Deutsche Bank AG, and before that as chairman of investment banking in Asia for UBS Group AG. Mr. Cai made his name as an aggressive deal maker who courted Chinese entrepreneurs and led them through Hong Kong initial public offerings.

Fundraising for AGIC Capital’s first fund started in March 2015 and reached a “first closing,” the point at which a fund can begin spending money on deals, in August 2015, the firm said in it statement.

By Alec Macfarlane

Source: Wall Street Journal

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