BEIJING Aug 15 China's Zoomlion Heavy Industry
Science and Technology Co Ltd said on Friday it was
bidding to acquire a 60 percent stake in farm machinery maker
Chery Heavy Industry Co Ltd for 2.09 billion yuan ($340
Zoomlion, seeking to profit from Beijing's drive to promote
large-scale rural modernisation, said in a stock exchange
statement the move could help propel the company to "become a
leading agricultural machinery enterprise in China."
The deal comes as major Chinese construction equipment
makers such as Zoomlion and Sany Heavy Industry
respond to a drop in demand for machines to build high-rise
blocks, bridges and roads in the domestic market. Zoomlion
issued a profit warning last month citing sluggish demand.
The Changsha-based company said it is seeking to acquire 1.8
billion shares in Chery Holding. Chery's turnover last year was
"one of the highest among the agricultural machinery enterprises
in China," the statement said.
The deal, which is being brokered at the Anhui Changjiang
Equity Exchange, will also help Zoomlion compete with
international firms like John Deere and CNH Industrial NV
, controlled by Fiat SpA.
Global farm machinery peers have also expanded in China,
lured by Beijing's determination to retool a farming industry
where annual gross output is far behind the U.S. level.
Zoomlion chairman Zhan Chunxin told Reuters in March he was
open to various acquisition opportunities. 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, Zhan said.
Fiat's CNH, which opened a small joint venture in Shanghai
many years ago, has opened three additional plants in China
since last year. Among them is a $100 million factory in Harbin
capable of making machines from planters and combine harvesters,
to balers and hay tools.
"Mechanisation is key to the development of agriculture in
China and it's a big driver of our business here as well," CNH
Industrial's China chief Luca Biagini told Reuters in a recent
(1 US dollar = 6.1466 Chinese yuan)
(Reporting by Fang Yan and Matthew Miller; Editing by Kenneth
Maxwell and David Evans)