(Adds analyst comments, background)
SHANGHAI, June 25 Mid-sized Chinese construction
machinery maker Changsha Zoomlion has won a joint bid with
Goldman Sachs and two other investors to buy Italy's Compagnia
Italiana Forme Acciaio SpA (Cifa) for 271 million euros ($422
Changsha Zoomlion Industry Science and Technology Development
(000157.SZ), which is eager to secure a foothold in developed
markets, said on Wednesday it would pay 163 million euros for a
60 percent stake in the Italian construction machinery maker.
Goldman (GS.N), Mandarin Capital Partners and Chinese
private-equity firm Hony Capital will hold the remainder.
"That's another major move by a second-tier Chinese
construction machinery maker in mature markets after Sany
announced plans for a U.S. plant," said Chen Yaobang, an industry
analyst with Huatai Securities.
Zoomlion rival Sany Heavy Industry Co (600031.SS) said
earlier this year it planned to invest more than $100 million in
a new U.S. facility, which will make it the first Chinese firm to
manufacture construction gear in North America.
"The moves will give them a foothold in mature markets and
boost their overall exports," Chen said.
Zoomlion's shares, traded on the Shenzhen Stock Exchange,
fell their daily limit to 18.94 yuan on Wednesday,
underperforming a 3.64 percent gain in the Shanghai Composite
Analysts said Zoomlion, whose shares had been suspended from
trading since April 8, was merely catching up with the benchmark
index, which slumped more than 20 percent during that period.
Many Chinese machinery makers are building up their presence
overseas in hopes of eventually competing with global leaders
such as Caterpillar (CAT.N). The Chinese government is also
encouraging domestic companies to invest abroad.
The Zoomlion deal also shows an increasing connection between
China Inc and private equity firms. With equity markets
struggling, private equity firms are seeking more chances to sell
companies to hungry Chinese buyers.
As for buyers, a China-private equity link-up allows buyout
firms to deploy more capital across the region, and helps prevent
a Chinese company from over-paying for an asset -- something
government officials are especially sensitive about after several
poorly performing overseas deals.
Chinese telecommunications company Huawei Technologies
[HWT.UL] teamed up with U.S. private equity firm Bain Capital
last year in an unsuccessful bid for 3Com Corp COMS.O, a U.S.
network equipment maker.
Zoomlion will use $50 million of its own cash and borrow $200
million from the Hong Kong branch of Britain's Barclays Bank to
fund the purchase of Cifa, which is being sold by Italian private
equity company Magenta and eight other shareholders.
Zoomlion expects the acquisition to help it expand sales
overseas, which came to 1.02 billion yuan ($148.6 million) in
2007, or roughly 11 percent of its overall sales.
Its chairman and chief executive Chunxin Zhan has said that
he expected the company to generate 40 percent of its sales
outside China by 2010.
($1=.6423 Euro; $1=6.866 Yuan)
(Reporting by Samuel Shen and Fang Yan; Additional reporting by
Michael Flaherty; Editing by Edmund Klamann)