Updated —KraussMaffei Group, a major global plastics machinery company, will soon have a new owner: state-owned China National Chemical Corp.
ChemChina called KraussMaffei “the Rolls-Royce” in the polymer machinery industry.
KM, ChemChina and Onex Corp., the Toronto-based private equity firm that has owned KM since 2012, announced the deal Jan. 10.
ChemChina highlighted that this is the single largest investment that a Chinese company has ever made in Germany.
In their announcements, both ChemChina and KM CEO Frank Stieler described the prospective new owner as a long-term investor — a contrast from KM's last two private equity ownership groups. Chemical companies have some of the longest-term investment cycles, he said in a conference call Jan. 11.
“With ChemChina, we have found a strategic and long-term oriented investor who has been interested in our company for many years,” Stieler said in a news release.
KM will continue to operate in its current corporate structure, and will remain in Munich, and all current KM locations will remain in operation, he said.
ChemChina, a state-owned-enterprise, said its existing machinery subsidiary — China National Chemical Equipment Co. Ltd. — and KraussMaffei have complementary product portfolios and markets. In addition, they are strategically and organizationally aligned with compatible management and cultures, allowing for significant synergies.
ChemChina Chairman Ren Jianxin said in a statement: “We are strengthening our company with one of the leading global engineering groups, encompassing a 178-year corporate history. In doing so, we expect that KraussMaffei Group will maintain its identity and independence.”
ChemChina claims to be China's largest exporter of rubber machinery.
Ren said the deal is also an implementation of China's “One Belt One Road” and “international production capacity cooperation” initiatives.
Ren said ChemChina is investing in KM's strong management team and technological expertise.
“The growth potential of the KraussMaffei Group is tremendous, especially through improved access to the Chinese market, which we can make possible,” he said. “We expect trends in the automotive industry towards advanced manufacturing and lightweight components will provide a huge development opportunity for the high-end plastic injection molding industry.”
Stieler said Onex had a “very successful year” in 2015, and Onex said the company will report 10 percent sales growth for the year.
Stieler said China currently accounts for a “low double-digit” percent of KraussMaffei's total business. He predicted that as part of ChemChina, KM will “considerably accelerate our growth strategy, especially in China and Asia, and to further strengthen the company in Germany and Europe.”
In China, the company will benefit from a trend toward processors buying higher quality and more efficient plastics machinery — and from a government effort called “Made in China 2025” to help Chinese manufacturers catch up with advanced manufacturing powerhouses like Germany, and fend off competition from other emerging economies.
China also is moving aggressively into energy efficient technologies.
As a result of the transaction, KM will accelerate its planned expansion in China, the companies said in the release, adding that the company's operating and corporate responsibility “will stay in Europe.” The company plans to increase its employment in Germany in 2016.
“All existing collective agreements and location-based commitments will remain unchanged,” the company said in the release.
Stieler said KraussMaffei is offering its top-line technology in China. Asked in a Jan. 11 conference call if KM will build a differentiated machine for China, he said company officials will decide other potential strategies at a later time.
KM currently has 4,500 employees globally, including 2,800 who are based in Germany. Stieler said in the conference call that the company plans to add 150 jobs in Germany this year. KM will have its own managing board, with the current members, he said.
“It's technology. It's quality, but it's also management skills,” Stieler said.