Zoomlion in acquisition talks in Germany and Italy; eyes European insurers
* in current acquisitions talks in Germany
* has looked at Imer in Italy
* looks at Western European insurers
Zoomlion Heavy Industry Science & Technology [Zhong Lian Zhong Ke; SHE: 000157; HKG: 1157], China’s state-owned construction machinery manufacturer, is in advanced talks to acquire an Italy-based haying equipment maker and a Germany-based gearbox maker, a source familiar with the situation said.
Such acquisition talks are in line with the company’s general strategy to expand agricultural machinery business via M&A at home and abroad, the source familiar said. Currently, it’s specifically interested in European manufacturing technologies in engines, motors, gear boxes, and hydraulic machines, he added.
Italian targets
The Changsha, Hunan-based company is almost close to the end of the acquisition talks with the Italy-based haying equipment maker, which filed for bankruptcy last year, the source familiar said. The target’s enterprise value is tens of millions in EUR, the source said. It has mandated BonelliErede for this deal, the source familiar said.
BonelliErede already advised Zoomlion for its 2015 acquisition of Ladurner Ambiente.
BonelliErede didn’t return requests for comment on this deal, although a source familiar said that BonelliErede has a long working relationship with Zoomlion.
Italtractor ITM S.p.A. could be potentially qualified as a feasible acquisition target, two sector experts said. Yet Zoomlion denied this target is in talks.
Titan International, Inc. (NYSE:TWI), a Quincy, Illinois-based holding company, engaged Goldman Sachs as financial advisor in connection with the possible sale of Italtractor, according to Titan’s announcement on 28 April 2016.
Italtractor was unavailable for comment while Goldman Sachs declined to comment.
Zoomlion was looking at another Italy-based agricultural machinery manufacturer IMER International, according to two sources briefed on this deal. Yet Zoomlion declined to comment on this matter.
Athough IMER is not up for grabs, the company’s main shareholders would be receptive to approaches from interested investors, while discussing about the possibility of refinancing, one of the sources briefed said, and added IMER’s turnover in 2014 was around EUR 100m.
Interest in Germany
Separately, Zoomlion is also in the advanced discussions with the Germany-based gearbox maker, whose products are used in agricultural tractors, the source familiar said.
These talks were supposed to be finalized this month, but are now expected to be pushed back to July-end 2016, the source familiar added. Zoomlion will need to conduct due diligence on the targeted company again as the target has recently reshuffled its management team, he added.
Looking at insurers
Meanwhile, Zoomlion is on the look-out for insurance targets in developed European countries, especially UK, Germany and France, the source familiar added.
The ideal insurers should obtain licenses for property insurance and be also free of regulatory punishment or ban by the local governments, the source familiar furthered. The company could invest several billions in CNY in each target, he noted.
This move aims to strengthen the company’s access to overseas capital, and to avoid risk of the country’s regulatory approval on capital outflow, which is quite essential to Zoomlion’s overseas acquisitions either in current talks or to be explored in the future, the source familiar explained.
At the same time, the company is also pursuing acquisition of a Connecticut-based lifting and material handling machinery company Terex Corporation in a proposed USD 3.4bn deal with different technologies from those Zoomlion is scouting in the agricultural machinery scopes, the source familiar said.
The CNY 30.5bn market cap company reported net debt of CNY 660.3m in 1Q16, up from CNY 383.4m the same period of last year. Its revenue reached up to CNY 3bn in 1Q16, down 20.1% year on year.
It had cash and cash equivalents up to CNY 10.5bn by March-end 2016, according to the same company report.
Zoomlion declined to comment on this story.