Caterpillar Inc. Eyes Control of China Machinery Firm
Tuesday, August 02, 2005
By Fang Yan
SHANGHAI, Tue Jul 26, 2005 8:36 AM ET
Caterpillar Inc is negotiating to buy control of the core unit of China's number-one machinery maker to tap the nation's building boom, executives with the mainland firm said on Tuesday.
Caterpillar was negotiating to buy at least 51% of Xugong Machinery, they said.
Xugong Machinery holds most of the assets of its parent, Xuzhou Construction Machinery Group Inc., which as the country's leading maker of machinery posted sales of 17 billion yuan ($2.1 billion) in 2004.
A successful deal would mark a milestone for Caterpillar in China, where the U.S. company says annual sales are approaching $1 billion.
Caterpillar declined comment and Carlyle could not be reached. But a Warburg Pincus executive in Beijing confirmed that the private equity firm had indeed initiated negotiations with Xuzhou Machinery but pulled out, without saying why.
Caterpillar competes with Japan's Komatsu Ltd., South Korea's Hyundai Engineering & Construction Co. and others in China's $12.5 billion construction machinery market.
China's 9.5 percent economic growth in the second quarter from the year-ago period is fueling global demand for mining and construction gear.
Caterpillar's chairman and chief executive, Jim Owens, told Reuters in May that the company wanted to acquire more state-owned businesses in China, adding that the U.S. giant was talking with provincial and central government officials...
...Last December, Caterpillar agreed to buy Shandong SEM Machinery Co. Ltd., one of the country's biggest manufacturers of wheel loaders.
Caterpillar a net exporter to China- now operates 10 facilities in the mainland, some of which are wholly owned, and employs about 2,000 people across the country.
Full version Reuters
SHANGHAI, Tue Jul 26, 2005 8:36 AM ET
Caterpillar Inc is negotiating to buy control of the core unit of China's number-one machinery maker to tap the nation's building boom, executives with the mainland firm said on Tuesday.
Caterpillar was negotiating to buy at least 51% of Xugong Machinery, they said.
Xugong Machinery holds most of the assets of its parent, Xuzhou Construction Machinery Group Inc., which as the country's leading maker of machinery posted sales of 17 billion yuan ($2.1 billion) in 2004.
A successful deal would mark a milestone for Caterpillar in China, where the U.S. company says annual sales are approaching $1 billion.
"Talks are going on with Caterpillar and others. They want to take at least 51 percent of our main subsidiary,"an executive at Xuzhou Construction told Reuters.
"Foreigners typically insist on a controlling stake."Potential investors that might jump on board the deal include U.S. private equity giants Carlyle Group and Warburg Pincus, two other Xuzhou executives said.
Caterpillar declined comment and Carlyle could not be reached. But a Warburg Pincus executive in Beijing confirmed that the private equity firm had indeed initiated negotiations with Xuzhou Machinery but pulled out, without saying why.
Caterpillar competes with Japan's Komatsu Ltd., South Korea's Hyundai Engineering & Construction Co. and others in China's $12.5 billion construction machinery market.
China's 9.5 percent economic growth in the second quarter from the year-ago period is fueling global demand for mining and construction gear.
Caterpillar's chairman and chief executive, Jim Owens, told Reuters in May that the company wanted to acquire more state-owned businesses in China, adding that the U.S. giant was talking with provincial and central government officials...
...Last December, Caterpillar agreed to buy Shandong SEM Machinery Co. Ltd., one of the country's biggest manufacturers of wheel loaders.
Caterpillar a net exporter to China- now operates 10 facilities in the mainland, some of which are wholly owned, and employs about 2,000 people across the country.
Full version Reuters
