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China’s Shandong Heavy Industry Group is spending €738m to take a stake in Kion, the German forklift truckmaker, in the biggest Chinese direct investment in a company in the eurozone’s largest economy.
Goldman Sachs Capital Partners and Kohlberg Kravis Roberts, owners of Kion, said Shandong’s Weichai Power unit would spend €467m to acquire a 25 per cent stake through a capital increase. Weichai will also buy a 70 per cent stake in a Kion hydraulics subsidiary for a further €271m.
Goldman and KKR will pay down Kion’s debt with the proceeds of the deal, which is being touted as a way for Kion to build more access to the Chinese market – source of a quarter of the global demand for forklifts – and improve the prospects for its hydraulics unit. A new German production site will be opened for the unit, to be carved out and renamed Linde Hydraulics.
KKR and Goldman bought Kion from Linde, the gases group, in 2006 in one of Germany’s biggest private equity deals. The owners said they would stick to the goal of an initial public offering for the group, which would give Weichai the option to increase its stake to 30 per cent under the terms of the deal.
Chinese companies have stepped up their interest in buying German assets, with Sany Heavy Industry acquiring Putzmeister, a maker of concrete pumps, this year. Shandong’s Kion deal was announced as Angela Merkel, German chancellor, was on a visit to China with business leaders.