China National Chemical Corp. (ChemChina) has agreed to buy German machinery maker KraussMaffei Group, valued at about $1 billion, in a bid to upgrade the state-controlled company’s expertise in manufacturing plastics and rubber, China Daily reported.
According to a statement released on Monday, Jan. 11, the company will make the transaction at an enterprise value of 925 million euros ($1 billion) from Onex Corp. and its affiliates.
The deal is expected to be completed during the first half of the year in which ChemChina, the country's biggest chemicals company, will team up with Guoxin International Investment Corp. and Henry Cai's AGIC Capital.
The report said that the purchase would make ChemChina one of most ambitious deal-makers after buying or investing in assets in Italy, France, Norway, the United Kingdom and Singapore in the past few years, including tiremaker Pirelli & C SpA.
According to the report, KraussMaffei earned a revenue of about 1.1 billion euros in 2014. The company supplies machines that process and produce plastics and rubber, with industry customers ranging from automotive to consumer goods and pharmaceuticals. The company has about 4,500 employees worldwide, of which 2,800 are located in Germany.
ChemChina said after the deal that the company will retain KraussMaffei's management and employees and maintain its headquarters in Munich while its operations will stay in Europe.
ChemChina chairman Ren Jianxin said in the statement that buying 178-year-old KraussMaffei will enhance ChemChina's chemical machinery business and also adopts to the Chinese government's broader plans to upgrade its manufacturing sector over the next decade.
Canada's Onex, the buyout firm which facilitated the deal, will receive proceeds of 670 million euros. The firm has invested 276 million euros in KraussMaffei in 2012.
The report said that the deal is considered as China's biggest acquisition in Germany.