The KraussMaffei Group is a typical representative of the German “Invisible Champion”. It has a history of 180 years and is one of the few plastic and rubber processing machinery and equipment manufacturers in the world that can provide a full range of processes such as injection molding, extrusion, and reaction technology. One. In the early years, he was famous for his participation in the research and development of civil and military industrial products such as train locomotives, leopard main battle tanks, and cheetah self-defense artillery.
In 2016, a Chinese consortium consisting of Chem China, CNIC Corporation Limited, and AGIC Capital was priced at 925 million euros from a Canadian private equity company (Onex Corporation). ) Acquired KraussMaffei Group and its subsidiaries, and vested it in China National Chemical Equipment (Luxembourg), a subsidiary of China National Chemical Corporation (NCE Global Holdings (Hong Kong) Co. Limited). .
Compared with the total Chinese acquisition of 35.9 billion euros in Germany in that year and the US $ 43 billion acquisition of Swiss pesticide and seed group Syngenta by China National Chemical Corporation, KraussMaffei’s acquisition is not attractive. Attention. However, KraussMaffei has been step by step since its acquisition and eventually became a “crab eater” in the Chinese A-share market. After the acquisition, KraussMaffei continues to retain its German “gene”: the company’s headquarters is still in Munich, Germany, the German decision-making power, the company’s legal form, and the influence mechanism of the industrial union have not changed.
With the expansion of business, KraussMaffei’s business in China increased by nearly 70% in 2017, global operating income exceeded 1.3 billion euros, sales and new orders set a company record, and the number of employees exceeded 5,000. This time, China National Chemical Corporation will adopt Krauss-Maffei to the A-share market by adopting the “backdoor listing” method, that is, injecting the equity of Krauss-Maffei owned by Luxembourg company into the existing listed companies of China National Chemical Corporation Qingdao Tianhua Chemical Industry Co., Ltd. (referred to as Tianhua Institute). This reorganization has been approved by the SASAC and is currently in the process of approval by the CSRC.
Why choose the Chinese A-share market?
KraussMaffei’s listing in China’s A-share market is driven by the dual influence of the driving force of business expansion and the pulling force of the Chinese financing market. First of all, in order to ensure the sustainable growth, KraussMaffei Group has increased its investment in machine clusters, IT infrastructure and plant construction in China. In 2018, the investment amount reached 67 million euros, an increase of 81% over 2017. For Krauss-Maffei, which has a strong demand for capital expansion, it has become inevitable to enter the capital market in a planned way.
Second, compared with the Frankfurt Stock Exchange, the Chinese A-share market is more attractive. Although the Frankfurt Stock Exchange has a history of more than 430 years and a scale of more than 1.76 trillion, German small and medium-sized enterprises, mainly family-owned companies, do not seem to be keen on capital operations. Considering the mandatory information disclosure and the threat of external acquisitions, most of these companies refuse to go public, and direct financing through listing on the securities market is not their main choice. Since the establishment of the DAX index, there have been more than 800 listed companies in Germany, which has further reduced the size of the German stock market and made the company’s valuation generally low: On September 19, the average price-earnings ratio of the German DAX index was only 20.8 times. The average price-earnings ratio of the index is 33.3 times.
The low valuation of the German stock market was reflected in the reorganization of Tianhua Court mentioned above. The equipment Luxembourg company promises that KraussMaffei’s net profit from 2018 to 2020 will be no less than 30.849 million euros, 50.049 million euros and 60.509 million euros, respectively. Compared with the M & A price of 750 million euros (calculated at the exchange rate on September 19), the corresponding valuations are approximately 25 times, 15 times, and 13 times, which are significantly lower than the current price-earnings ratio of 37 times for similar companies in the Chinese A-share market. Level.
Therefore, for foreign companies such as KraussMaffei with good asset quality and performance level, relying on the strength of shareholders Sinochem Group can comprehensively utilize internal and external superior resources, and it is only natural to choose to list in China.
Left one: Cai Ting, director of the Planning and Development Department of China National Chemical Corporation, middle: KraussMaffei CEO Frank Stiller, right one: Former China Chemical Finance Co., Ltd. CEO Chen Junwei (@ 路透社)
KraussMaffei’s trade union organization IG Metal and the company’s leadership also gave positive comments on the company’s listing plan. Peter Krahl, chairman of the KraussMaffei Enterprise Employees Committee, said that “further improving access to the Chinese market will continue to promote job creation in Germany and Europe”.
What does it mean for Sino-German cooperation?
As “the first person to eat crabs”, KraussMaffei’s A-share listing in China has brought not only quantifiable economic benefits to China and Germany, but also a model reference for Sino-German business cooperation.
First of all, KraussMaffei has carried out a fruitful and benign technical cooperation with Sinochem. KraussMaffei Group’s China CEO Cui Xiaojun said that compared with previous private equity companies as owners, China Chemical Group is a strategic investor. It improves the current rubber machinery by studying KraussMaffei’s advanced management system. Manufacturing business to improve quality standards; Sinochem can also use KraussMaffei’s global sales network and customer base to push China National Chemical Corporation’s rubber machinery products to a wider international market.
On the other hand, the direct labor cost of KraussMaffei is 17% higher than that of the domestic plastic machinery industry. With the cost control experience of China Chemical Group and the optimization of global production structure, KraussMaffei can further optimize the cost structure and improve product profitability. Ability to ensure its leading position.
Secondly, KraussMaffei’s operation in China has promoted the technology and resource cooperation between German “Industry 4.0 Strategy” and “Made in China 2025”. As a leader in the rubber and plastics machinery industry, KraussMaffei currently uses digital services as its strategy and is committed to creating a model of the “plastic 4.0” industry and benchmarking the “industry 4.0 strategy.” Other related companies under ChemChina can open up upstream and downstream channels with KraussMaffei to promote strong alliances. At the same time, Sinochem Group has issued a “Commitment on Avoiding Inter-industry Competition” to prevent KraussMaffei and Sinochem-related companies from competing in the rubber and plastics processing industry to cause internal friction. In the territory of China’s chemical industry, Tianhuayuan has strong resource integration capabilities and provides an important platform for the listing of many chemical machinery groups. KraussMaffei can use Tianhuayuan’s platform advantages to reduce the adaptive friction in the capital market in China.
Third, the listing of KraussMaffei’s A shares in China can release positive signals for the interconnection of China and Germany’s capital markets. In August this year, the German Ministry of Economy and Energy stated that it would revise the Foreign Economic Regulations, intending to reduce the threshold for reviewing the acquisition of German equity by entities outside the EU from 25% to 15%, and will more closely review the military industry and key technical facilities. Acquisitions.
Because Germany is worried that foreign acquisitions will steal the leading technology of the “Industry 4.0 Strategy” and complain that China’s limited market opening will harm the mutual benefit of both parties. Before German vigilance over Chinese capital affects the deepening of Sino-German economic and trade relations, letting German companies share Chinese market dividends not only allows Germany to see China’s determination to further deepen the opening of financial markets, but also makes Germany realize that capital integration will not Undermining the fair competition between Germany’s “Industry 4.0 Strategy” and “Made in China 2025”, the two sides will focus on their strengths and provide opportunities for integrating technology, capital and the market.
Relying on Frankfurt’s favorable conditions as a European financial center, Germany does not lack the ability to expand the two-way interoperability between Chinese and German capital-it is reported that Qingdao Haier is expected to become the first Chinese company listed on the D-shares of the Frankfurt China Europe International Exchange-not to mention Use the word “naive” to conceal his ambitions for the capital market. Perhaps Germany needs more decision-making will, capturing positive signals from more successful German companies like KraussMaffei in order to prevent protectionist tendencies from dampening the confidence of more “crab-eaters”.