Weichai Power unit KION in US$2.1 billion European acquisition

Weichai Power, through its European unit KION Group, has agreed to buy loss-making Luxembourg-based DH Services, a supplier of automation technology, for around US$2.1 billion in a deal that will enable the Shandong province-based automotive and equipment maker it to tap growing logistics demand from the e-commerce sector.

The deal will “optimise supply chains and meet the material handling automation needs of its customers” and “create a global leader not only in automotive and equipment manufacturing, but also in advanced material handling”, Weichai said in a filing to Hong Kong’s stock exchange late Tuesday.

“In the supply chain and logistics industry, the automated interaction of various processes in production and warehousing is increasingly important,” Weichai said.

The sellers include various private investment funds and DH Services’ employees and management.

Weichai’s main products are high-speed heavy-duty diesel engines and engines parts. It owns a 38.25 per cent stake in Frankfurt-listed KION, which makes industrial forklifts trucks and sell them to more than 100 nations under seven brands.

Weichai said it saw “synergies” by combining KION and DH Services via “mutual leverage of customer channels and sales networks as well as technological capabilities”.