MAN SE, Europe’s third-biggest truckmaker, agreed to pay 560 million euros ($788 million) for a 25 percent stake in Sinotruk (Hong Kong) Ltd. to expand in China as the recession hammers domestic sales.
The company will buy new and existing shares of Sinotruk, China’s biggest heavy-truck maker, according to a statement from Munich-based MAN yesterday. The price is 21 percent more than Sinotruk’s average trading price over the past 60 days on the Hong Kong exchange, it said.
MAN wants to expand in China and other emerging markets after industrywide European heavy-truck sales slumped 45 percent in the first five months amid the economic slowdown. Sinotruk will get access to new technology after increasing competition caused it to forecast a drop in first-half profit.
“We wanted a foothold in the Chinese market and Sinotruk wanted a partner that could offer technology,” MAN Chief Executive Officer Hakan Samuelsson said on a conference call from Hong Kong.
Under the agreement, MAN will license engine, chassis and axle technology to Sinotruk, which will use the know-how to develop a new line of trucks to be made in China, with an annual sales target of 50,000 units by 2015.
The companies will also jointly develop a new brand of premium truck for China and other emerging markets, Samuelsson said. Chinese officials may approve the deal in the next couple of months, he added.
Sinotruk, the maker of Howo and Gold Prince trucks, sold 20,805 vehicles in the first five months, a 12 percent decline. Sales rose 19 percent for the whole of last year. The Hong Kong- based truckmaker expects to report a “substantial reduction” in first-half profit, according to a June 18 statement.