MAN plans to buy into Sinotruk

Jul. 16, 2009 (China Knowledge) - Germany-based truck manufacturer MAN SE plans to invest EUR 560 million to buy a 25%-plus-one-share stake in Sinotruk (Hong Kong) Ltd<3808>, the Hong Kong-listed arm of China's largest heavy truck manufacturer, China National Heavy Duty Truck Group, sources reported.

In order to form a long-term strategic partnership, MAN will subscribe to convertible bonds and purchase existing shares from Sinotruk's parent, said Sinotruk in a statement filed with the Hong Kong Stock Exchange.

The German truck maker said that the price of the deal represents Sinotruk's 60-day trading average plus a 21% premium.

The transaction is based on MAN's good relationship with Sinotruk for many years, said MAN Chief Executive Hakan Samuelsson, adding that the company's investment in Sinotruk lays the foundation for the joint development of a new heavy-truck series targeting emerging markets.

The deal is MAN's latest move to enhance its presence outside its core European market, especially in the BRIC countries, Brazil, Russia, India and China, where demand for transportation may grow in the long term along with a revival in economy, sources said.

Last month, Sinotruk predicted that its net profit for the first half of this year would show a sharp drop due to the declining heavy truck exports caused by the financial crisis and the narrowing profit margin brought by the increasing competition in the industry, China Knowledge reported earlier.