The Chinese construction giant is looking into new sources of growth by moving into overseas market, analysts say.
Zoomlion Heavy Industry Science & Technology Co. Ltd, one of China's largest construction machinery makers, said today it has acquired German leading dry mortar producer, M-TEC.
Zoomlion did not disclose details as the deal is still subject to regulatory approvals.
The Chinese construction giant is looking into new sources of growth by moving into overseas market, analysts say, amid an oversupply of construction machinery and products in the domestic market.
"The decision to enter the dry mortar equipment area was made based on considerations of the company's direction during its transformation and upgrading, as well as its future prospect," Zoomlion vice president Chen Xiaofei said yesterday.
The purchase of the Neuenburg-based M-TEC, which is currently a leading company in the area, will help expand Zoomlion's market for more products, and bring in a new growth engine for the company, Chen added.
The two companies have already entered into an agreement, but the delivery of equity is still underway, said He Wenjin, vice president of the company's investment and financing department. He expected the deal to be finished in March.
Zoomlion CEO Zhan Chunxin had said earlier that to expand overseas market via M&As was the way to future for machinery companies in China where the market was already saturated.
Net profit for the Chinese company fell 45.48 percent to 3.795 billion yuan in the first three quarters this year.
Regarding concerns that the purchase could add to Zoomlion's financial strains, Chen said the project may be profitable the first year after it starts production, and all the input costs will be recovered in two to three years.
In 2008, Zoomlion acquired Compagnia Italiana Forme Acciaio SpA (Cifa), the world's third-largest concrete machinery manufacture, for 271 million euros.
Source: Caijing
