Sany Said It Would Acquire Putzmeister

China has laid claim to a pillar of German industry after Sany Heavy Industry, the country’s largest construction equipment group, said it would acquire Putzmeister, a Mittelstand company that makes high-tech concrete pumps. The deal is among the largest in which a Chinese company acquires one of the family-owned, niche-focused, German engineering groups – the backbone of the German economy. The term Mittelstand covers small and medium-sized family groups. Sany Heavy Industry, whose chairman is China’s richest man, and Citic PE Advisors, a Chinese private equity company, will acquire all of Putzmeister, with Citic retaining a minority shareholding. The parties declined to disclose a transaction price but people close to the deal said its value was somewhere in the region of 00m. The Mittelstand’s engineering prowess and strong brands are highly attractive to potential foreign suitors but tight family control has been a barrier to widespread Chinese takeovers in Germany. The bid could herald a new era of Chinese dealmaking in Europe as Chinese companies look to “go global” and reduce their exposure to the Chinese economy. Zoomlion, Sany’s Chinese rival, bought Italy’s concrete pumps maker Cifa in 2009. Other German Mittelstand companies now in Chinese hands include Waldrich Coburg, a maker of milling machines, and Dürrkopp Adler, a maker of sewing machines. “There will be surprise that a former star of the German economy and a hidden champion has been taken over by the Chinese. It’s a wake-up call. There is still a perception that Chinese companies produce only cheap wares. Say is different – they are the vanguard of new Chinese competition, " Hermann Simon, chairman of Simon-Kucher & Partners, a German consultancy, said. In 2009, Sany Heavy Industry, which makes a wide range of machinery from excavators to mobile cranes, overtook Germany’s Putzmeister as the world’s largest concrete pumps manufacturer by sales. The Shanghai-listed company often referred to as China’s Caterpillar wants to build a global Chinese construction equipment brand and already has plants in the US, Brazil, India and Germany. But most of its sales are still in China where government measures have cooled the real estate market and reduced demand for construction equipment. In Europe, Sany has until now lacked a large sales and service network and established brand name. Putzmeister, based near Stuttgart, has about 3, 000 employees. Revenues reached a record bn in 2007 but fell by around half during 2008 and 2009, leading to hundreds of job cuts. Although the company has since returned to growth and profitability, revenues last year were around 70m. Source: ftchinese.com