On 27 December, 2012, the leading Chinese automotive and equipment manufacturer Weichai Power Co., Ltd. (“Weichai Power”), a subsidiary of Shandong Heavy Industry Group, represented by King and Wood Mallesons has successfully completed the transaction with Kion Group (“Kion”), one of the world’s leading manufacturers of industrial trucks and a global leader in hydraulic technology.
Weichai Power has invested a total of EUR 738 million, including EUR 467 million paid in to acquire a 25% stake in Kion through a capital increase, EUR 271 million to acquire from Linde Material Handling for a 70% majority stake in Linde Hydraulics and the right to continue using Linde trademark for future hydraulic products. In addition, the Parties agreed to grant Weichai Power options to further increase its shareholding in Kion both before and after the completion of a potential future IPO.
Weichai Power (2338HK/000338SZ) is a leading automotive and equipment manufacturing group in China. It operates in three main business segments, covering power assembly (including engines, gear boxes and axles), commercial vehicles, and automobile electronics and parts, encompassing one of the most comprehensive product ranges in the industry. Weichai Power has the highest sales volume globally in high-speed heavy-duty engines and heavy-duty gearboxes. Its spark plug products enjoy the largest market share in China, and its heavy-duty axle products are considered a top brand in China. The company also ranks No. 4 in heavy duty trucks in China. The company was listed on Hong Kong Stock Exchange in 2004 and on Shenzhen Stock Exchange in 2007. In 2011, Weichai Power’s revenue reached at RMB 60 billion (about EUR 7.5 billion).
Kion is Europe’s market leader in the trucks industry and the second largest truck manufacturer in the world as well as the leading international supplier in China. It possesses six brandsinclude Linde, STILL, Fenwick, OM STILL, Baoli and Voltas. The Linde and STILL brands serve the premium segment worldwide. Fenwick is the largest supplier of material handling products in France, while OM STILL is a market leader in Italy. The Baoli brand focuses on the economy segment, and Voltas is one of the two market leaders in India. In 2011, KION Group generated revenue of around EUR 4.4 billion.
This seven month project was led by Xu Ping and Mark Schaub, together with core members from the King & Wood Mallesons team consisting of Liu Cheng, Tian Wenjing, Wei Kao, and Melanie Stoeckert. The King & Wood Mallesons team fully participated in all aspects of the project, including due diligence, negotiation and executions of agreements, government approvals, financing as well as closing. The King & Wood Mallesons team was also in charge of facilitating and coordinating the entire project, including coordination amongst all legal advisors and played a vital role in communications and negotiations with Kion and its investors KKR and Goldman Sachs Capital Partners. The project involves, inter alia, the investments in Kion and its hydraulic business, the different options to increase future Kion shareholding and the carve-out structure and arrangement, which presented special challenges and requirements in designing and implementing this transaction. The King & Wood Mallesons team has been actively pursuing this transaction from the begining so that the deal can be completed within a very short time frame. Due to such efforts, the Parties completed the signing of the framework agreement on 31 August, 2012. After the signing, in order to fulfill the various conditions precedent under the agreements, the King & Wood Mallesons team has been continuing to represent Weichai Power in negotiation with the stakeholders, and ultimately procured a successful closing of this project.
