Chinese eye German machine tool group MAG: sources

FRANKFURT Mon Jul 9, 2012 10:10am EDT

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FRANKFURT (Reuters) - Chinese companies are eyeing German machine tool group MAG, two sources close to the transaction said on Monday, in a sign appetite remains high among Chinese groups for the acquisition of German industrial know-how.

State-owned Shenyang Machine Tool (SMTCL) 000410.SZ confirmed it is in talks to acquire Goeppingen-based MAG, while two sources close to the situation said rivals such as Dalian (DMTG) TMTMAA.UL, Quier Machine Tools and YierMT Group are also looking at the asset.

Separately, private equity investors such as Triton and DBAG DBAG.DE are also looking at the group, which last year posted sales of 900 million euros ($1.1 billion) and employs 3,500, one source said.

"After a successful evaluation phase, we are in talks with a large number of qualified potential bidders from around the globe," a MAG spokesman said.

The companies and the private equity firms declined to comment.

Chinese companies have already this year scooped up a number of German groups to gain access to technology, brands and worldwide distribution.

In April, Xuzhou Construction Machinery Group (XCMG) agreed to buy a majority stake in privately-held machinery manufacturer Schwing, following a similar deal a few weeks earlier, when car parts maker Hebei Lingyun (600480.SS) acquired car door latches specialist Kiekert.

In January, Sany Heavy Industry (600031.SS) said it would buy Schwing rival Putzmeister in a 360 million euro ($443.1 million) deal, and LDK Solar LDK.N invested in solar group Sunways SWWG.DE.

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Were it to purchase MAG, it would not be the first investment in Germany for Shenyang's SMTCL, which ranks itself among the seven largest machine tool manufacturers in the world. In 2004, the group acquired German heavy-duty machine tool builder Schiess.

MAG was built into a global machine tool group by American investor Eng Mo Meidar, who from 2005 scooped up ailing subsidiaries of companies like steel conglomerate ThyssenKrupp (TKAG.DE) and KUKA (KU2G.DE) and restructured them.

In May this year, Eckhard Cordes, a former executive at Daimler (DAIGn.DE) and Metro (MEOG.DE), took the helm as MAG chairman to lead the recovery of the maker of machine tools for the durable-goods industry.

Goldman Sachs has been mandated to look for a buyer for MAG Europe and MAG Americas - which may be sold separately - with first bids expected by September, the MAG spokesman said, adding: "We hope to find a buyer by October."

MAG Europe, which accounts for two thirds of the group's sales, could attract a price tag of about 250 million euros, another source said. MAG IAS, which delivers 80 percent of MAG Europe's sales, posted a 2011 loss of 52.4 million euros.

($1 = 0.8126 euros)

(Reporting by Arno Schuetze, Alexander Huebner and Andreas Kroener in Frankfurt, with Fang Yan in Beijing; Editing by David Holmes)

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