Chinese injection press maker Haitian International Holdings Ltd. is paying almost HK$68.7 million (US$8.8 million) to buy a German research company owned by three of its top executives, in a move Haitian said will boost its development of high-end, all-electric presses.
Ningbo-based Haitian said Aug. 23 that it is buying Zhafir Plastics Machinery GmbH, which had been developing a German-built, all-electric machine for the Asian market as an alternative to top-end Japanese, South Korean, Taiwanese or European machines.
``This will enable the group to develop and supply [plastic injection molding machines] for this new, growing and demanding market segment, to support the group's worldwide growth and further strengthen Haitian International's leading position in the industry,'' said Haitian Chief Executive Officer Zhang Jianming in a news release.
It's not entirely clear, though, why Haitian is choosing to buy out Zhafir now and bring it under its corporate umbrella. Company officials declined to comment.
Zhafir, which had been 60 percent owned by Zhang, already was working very closely with Haitian. Zhafir says on its Web site that its goals are geared toward advancing Haitian's market presence.
Zhang and other executives, including well-known German plastics executive Helmar Franz, bought Zhafir in late 2005, and saw the business as a way to develop high-end machines outside of established Chinese production and its focus on short-term development cycles.
Haitian will develop Zhafir as an independent operation and a separate brand from its own machines. Because Zhafir targets a higher-technology market, it will have ``different approaches in development, manufacturing and sales,'' Haitian said in a news release.
``This will as well facilitate the focus of the two brands on the different needs and customer requirements ... create advantages and innovation in each market segment and better address the competitive environment.
``It is planned to develop broad synergies between the two brands,'' the company said.
Franz, chairman of Haitian's strategy and development committee, said Zhafir's team of engineers is making ``exciting progress'' and is likely to present its work at the K 2007 trade show in Germany in October.
Zhang, Franz and Haitian executive Zhang Jianfeng bought Zhafir in late 2005 from unnamed independent third parties, Haitian told the Hong Kong Stock Exchange in an Aug. 22 filing. Zhang Jianming acquired 60 percent, and Zhang Jianfeng and Franz each bought 20 percent.
Zhafir built research and development facilities in Ebermannsdorf, Germany, last year and started R&D operations in January, the company said.
According to the Hong Kong filing, the three men acquired Zhafir in 2005 for ``an aggregate consideration'' of 20,000 euros (US$27,115).
The firm is now being valued at more than 300 times that - but, according to the filing, the acquisition is on normal commercial terms that are ``fair and reasonable'' for the company and shareholders.
Also in the filing, Haitian said that the HK$68.7 million purchase price is going to pay off a loan and interest, equaling that same amount, from CEO Zhang Jianming to Zhafir.
Zhafir lost a total of HK$10.1 million (US$1.3 million) in 2006 and the first half of 2007, because it was still in an R&D phase, Haitian said.
After Haitian acquires Zhafir, Haitian will own 91 percent of it, with Franz retaining a 9 percent stake.
The purchase is being made by a wholly owned Haitian subsidiary, Sunnew Investments Ltd., based in the British Virgin Islands.