Zoomlion has offered US$236 million to buy the remaining 40.7% it does not already own in Cifa. The offer was made to Goldman Sachs, Hony Capital, and Mandarin Capital Partners, which were Zoomlion’s investment partners for the acquisition of the Italian concrete equipment manufacturer in 2008.
"The buy-back offer is so timed because firstly Zoomlion will better integrate CIFA's business and accelerate its push for international expansion, and secondly this will bring about improved efficiency and result in operations, and seamless integration of resources. The move best suits the long-term interest of the investors, share-holders, CFIA itself, Zoomlion, and all stake-holders along our industry chains,” said a statement from Zoomlion.
Zoomlion says it will fund the purchase with its own cash. “The company enjoys steady and abundant liquidity and the transaction will not pose as a cost burden. Meanwhile, the deal complies with the overall interest of the company and will not lead to increased capital cost for the company in other channels,” said Zoomlion vice president and CFO Xiaoming Hong.
He continued, “Since Zoomlion’s acquisition of CIFA four years ago, there has been an excellent synergy between the two. However, holding only 60% of the latter’s shares means that from the perspective of corporate governance, many of the operational decisions must be adopted with the approval of Zoomlion CIFA’s own board of directors and/or shareholder meetings, compromising the efficiency and result of decision making.”