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Get rid of the fog of the "acquisition case" of Xingma group

Guide: Recently, it has been reported that American caterpillar (hereinafter referred to as Caterpillar) plans to acquire 20% of the shares of Anhui Xingma Automobile Group Co., Ltd. (hereinafter referred to as Xingma group), the controlling shareholder of a listed company, to jointly build a heavy truck engine plant, and Xingma automobile may issue additional shares to the group to acquire an engine company

recently, some media reported that American caterpillar Corporation (hereinafter referred to as Caterpillar) plans to acquire 20% of the shares of Anhui Xingma Automobile Group Co., Ltd. (hereinafter referred to as Xingma group), the controlling shareholder of the listed company, to jointly build a heavy truck engine plant, and Xingma automobile may issue additional shares to the group to acquire the shares of the engine company

therefore, caterpillar and Xingma group issued a joint statement, saying that caterpillar has no plan to acquire the equity of Xingma group. "This statement is only to refute false reports. Caterpillar has no obligation to update or modify this statement in the event of new circumstances, new events or others in the future."

however, in this statement, the wording is euphemistic, which has reserved enough space for all possible incidents in the future

is the acquisition news misinformed

on February 5 this year, Levin Richards, global vice president of caterpillar, and yaokeqiang, general manager of caterpillar automotive engine china, went to Xingma group for investigation

subsequently, caterpillar and Xingma Group signed a cooperation intention agreement on the vehicle engine project to jointly develop a new generation of engines. There are two options: first, caterpillar directly invests in the operating Xingma engine plant; Second, Xingma group will take the lead and provide relevant resources to build caterpillar engine production plants locally

call caterpillar (China) Investment Co., Ltd. and Xingma group respectively, and both sides express their negation. "The relevant cooperation agreement has indeed been signed, but it does not involve the acquisition of equity and other contents. The specific cooperation terms still need to be negotiated. As the two sides signed a confidentiality agreement, it is not convenient to disclose the relevant contents." Said the relevant person in charge of caterpillar

the relevant person of Xingma group admitted that the company hopes to find a partner with excellent technology, because the technical level of the engine largely represents the level of an automobile enterprise, but its partner has not been finalized. "We have been looking for cooperation opportunities."

on May 17, Xingma group announced that 51% of the equity of Xingma group held by Ma'anshan state owned assets supervision and Administration Commission, the former controlling shareholder of Anhui Xingma Automobile Group Co., Ltd., was transferred to Ma'anshan Industrial Investment Co., Ltd. for operation and management. Xingma group has handled the industrial and commercial registration of shareholder change on April 27, 2007

in the announcement, there was no shadow of caterpillar. It is still unknown whether there is a certain relationship between this equity adjustment and the change of major shareholders' equity

according to relevant data, Xingma group is a state-owned holding enterprise, with four holding subsidiaries: Anhui Xingma Automobile Co., Ltd., Anhui Valin Automobile Co., Ltd., Hunan Xingma Heavy Automobile Co., Ltd. and Tianjin Xingma Automobile Co., Ltd., with fixed assets of about 1.5 billion yuan and total assets of about 3billion yuan

among them, Xingma Automobile Co., Ltd. is one of the largest specialized automobile production bases in China. Its bulk cement truck accounts for more than 50% of the domestic market share. The concrete mixer truck replaces the imported products. Its production and sales rank first in China. It was listed in Shanghai A-share market in March2004

however, the industrial matching of engines has always restricted the further development of Xingma group, and self-lubricating materials will be more useful. In 2004, Xingma group proposed to build an engine plant with an estimated investment of nearly 2billion yuan, but the specific operation progress was slow. At present, the competitors of Xingma group, such as Dongfeng Motor and Shaanxi Automobile Group, have jointly established their own engine plants with foreign giants

backdoor development and utilization of global resources may make an enterprise rise rapidly. For Xingma group, the joint venture can obtain caterpillar's technology and funds, which can not only effectively alleviate the cost pressure and internal risks of its engine external procurement, but also have an important weight to compete with Dongfeng Motor and Shaanxi Automobile Group. However, there is still great uncertainty about how much technology caterpillar can offer with a 20% stake

and Xingma group also has the advantages that attract caterpillar, such as the economic superiority of the central region of the Yangtze River Delta, the strong support of local governments, and the radiation impact on Anhui automobile enterprises. Caterpillar's performance in China has not been very outstanding. With the help of Xingma group, caterpillar has an additional base that can supply the Asia Pacific market

some analysts say that the foundation for cooperation between the two sides has already been laid, and the conditions for joint venture are relatively mature. Xingma group was a partner of caterpillar a few years ago, and imported its engines and heavy truck parts

caterpillar's Chinese feast

it is learned from relevant channels that this year caterpillar is accelerating its pace of entering the Chinese market

"we hope to not only regard China as a low-cost manufacturing center, but also our competitors have investment and business in China, so we want to come." Rilavan said

as one of the world's top 500 enterprises whose business covers construction machinery, mining equipment, diesel and natural gas engines and industrial gas turbines, Caterpillar's business income in the engine field reached US $10billion in 2006, accounting for nearly one third of its total sales income

it is not difficult to understand that caterpillar has been committed to the joint venture in the field of vehicle engines in China. As early as 1994, caterpillar and Shanghai Diesel Engine factory jointly established caterpillar Shanghai Engine Co., Ltd., with a registered capital of 16million US dollars. At that time, the share ratio of Chinese and foreign sides was 45:55 respectively. However, as the company has suffered losses for years since its establishment, it ended up in liquidation at the end of 1997. For this reason, the export growth of China's extruder products from the caterpillar liquidation committee at about 35.4 million yuan will show a situation of steady progress. The staff will purchase inventory and fixed assets and resell them to Dongfeng Machinery Group Co., Ltd., the then state-owned shareholder of Shanghai diesel

not long ago, Caterpillar's plan to participate in Shanghai Diesel Engine Co., Ltd. temporarily failed. This is another heavy blow for caterpillar in the domestic machinery joint venture project after the slowdown of import substitution trend in the joint venture with Xiamen Industrial Group. It is understood that the main reason for this failure is that Carlyle XCMG's acquisition case has not been approved by the Ministry of Commerce, which has caused foreign parties to worry about the same situation in this project

last year, it was widely rumored that caterpillar was interested in Weichai, a Chinese diesel power giant, but it gave up because of differences in cooperation conditions between the two sides

in contrast to caterpillar, Cummins, its main competitor in the engine field, has developed rapidly in China in the past two years. It has not only maintained a good cooperative relationship with Dongfeng Motor for a long time, but also carried out new cooperation with Shaanxi Automobile Group and Foton Motor. It has established a global R & D center in China, and its sales in China have exceeded US $1billion for three consecutive years

compared with Cummins, Caterpillar's joint venture experience in the field of automotive engines can be called a failure. Since the engine joint venture in Shanghai was declared bankrupt three years after its establishment, Caterpillar's engine business in China has not made new progress

confusion of M & a strategy

since caterpillar entered China, there has never been a lack of rumors about joint venture M & A. XCMG, XCMG, Liugong in Guangxi, Xuangong in Hebei, Weichai Power and other well-known enterprises in the industry have been more or less involved with caterpillar

over the past few years, only Shandong mechanical engineering company has succeeded in its M & A in China, but it has been involved in the industry's criticism of "malicious M & a". For caterpillar, which has experienced many "M & A storms", the world's largest mechanical equipment manufacturer urgently needs to adjust its investment strategy in China

with the introduction of regulations on foreign capital M & A in basic industries such as machinery, caterpillar is also reflecting on its high-profile M & a strategy. According to relevant personnel of caterpillar, the company's strategy in China is multi-level, not limited to mergers and acquisitions. The establishment of a wholly-owned enterprise is equally important for caterpillar to improve its business model in China. "M & A, joint venture and sole proprietorship will all become caterpillar's investment means in China. Of course, when there is a suitable opportunity, we will also work with our joint venture partners to expand the scale of the joint venture or seek opportunities for M & A."

with the adjustment of investment strategy, the next step of caterpillar is somewhat confusing. A securities industry analyst told that even if the joint venture between caterpillar and Xingma group does exist, there is uncertainty about the way of cooperation. Whether to establish a sole proprietorship of the engine or a joint venture with Xingma group. If a joint venture is established, the proportion of equity of both parties and how to distribute the company's control are unknown

to occupy more Chinese market and continuously expand sales share is the biggest temptation for enterprises such as Caterpillar. Whether establishing a sole proprietorship or a joint venture with a Chinese partner is based on this purpose

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