* Deal is biggest Chinese acquisition of a German company
* Buyers include ChemChina, private equity firm AGIC
* Chinese companies seek tech know-how of Western firms
* ChemChina adds KraussMaffei to Pirelli purchase
By Elzio Barreto and Denny Thomas
HONG KONG/LONDON, Jan 11 (Reuters) - The biggest-ever
Chinese acquisition of a German company was announced on Monday,
with a consortium led by state-owned China National Chemical
Corp (ChemChina) buying industrial machinery maker KraussMaffei
Group for about $1 billion.
The deal is the latest example in recent years of
deep-pocketed Chinese companies seeking to gain the
technological expertise, distribution networks and branding of
Western firms, often built up over several decades.
It also comes at a time when China's weakening currency is
encouraging companies from the country to shift investments
overseas, which is expected to drive more dealmaking this year.
The ChemChina-led consortium, which also includes Guoxin
International Investment Corp and private equity firm AGIC
Capital, has agreed to buy KraussMaffei from Canada's Onex Corp
OCX.TO for 925 million euros, AGIC and Onex said, confirming a
Reuters report on Jan 7
ChemChina will take two-thirds of KraussMaffei, which
started out as a locomotive maker in Munich in the 1830s before
expanding into tank-making in the 1930s, and now manufactures
machinery for processing plastics and rubber.
The deal beats the previous record for a Chinese group's
acquisition of a German company, set in 2012 when Sany Heavy
Industry Co Ltd 600031.SS bought concrete pump maker
Putzmeister Holding GmbH for $698 million.
Chinese firms spent around a record $116 billion on mergers
and acquisitions (M&A) in 2015, according to Thomson Reuters
data.
ChemChina itself bought Italian tyre maker Pirelli for 7.3
billion euros last year and has also been discussing the
possibility of buying Swiss chemicals firm Syngenta SYNN.VX . A
person familiar with ChemChina's thinking said it was still keen
on pursuing the Syngenta acquisition.
Reuters reported in November, meanwhile, that least three
Chinese state-owned firms were bidding for German waste
management company EEW in an attempt to acquire advanced
technology. Osram's OSRn.DE lamps business has also attracted
Chinese bidders.
Germany welcomes investment from Chinese companies, as long
as there are no national security concerns, bankers and lawyers
said. So far no such M&A moves have been hampered by political
intervention, whereas in the United States Chinese takeovers are
a sensitive political issue.
DEALMAKER
Chinese banker Henry Cai, who founded AGIC Capital last
year, played a key role in making the KraussMaffei deal happen,
according to a source familiar with the matter.
The veteran Asia dealmaker is one of the region's most
highly paid bankers and is dubbed the "grandfather of China's
capital markets" in the industry.
"We see big opportunities in industrial development,
particularly in intelligent manufacturing," Cai, a former China
dealmaker at Deutsche Bank (DE:DBKGn) and UBS, said of the KraussMaffei
acquisition. It represents the first investment for AGIC, which
has offices in Beijing, Shanghai, Hong Kong and Munich.
The deal values unlisted KraussMaffei at about 6.6 times its
earnings before interest, taxes, depreciation, and amortisation
(EBITDA). Onex had said in its third-quarter report published in
November that KraussMaffei posted EBITDA of 140 million euros
for the previous 12 months.
Listed peers trade at multiples of seven to eight times
their expected core earnings.
The transaction is likely to close in the first half of
2016, subject to regulatory approval, Onex said. The Canadian
firm bought KraussMaffei from U.S. investor Madison Capital in
2012 in a 568 million euro deal.
Standard Chartered STAN.L and Freshfields advised the
buyer group and Barclays BARC.L , HengelerMueller and Fangda
advised KraussMaffei, according to people familiar with the
matter, who declined to be declined as the information is not
public.
ChemChina did not immediately respond to an email seeking
comment on the deal. Guoxin could not be reached for comment.
($1 = 0.9159 euros)