Xuzhou Mach to buy 60% Chunlan Auto for $25 mln

Shanghai, September 5 (Gasgoo.com) Xuzhou Construction Machinery Science & Technology Co., Ltd. (SZSE: 000425), a leading engineering equipment manufacturer in China, has announced its plan to purchase a 60% stake in Nanjing Chunlan Auto Manufacturing Co., Ltd., for 170 million yuan ($24.9 million), said caijing.com.cn today.

A statement issued by Xuzhou Machinery on September 4 said that by June 30, 2008, truck-maker Chunlan Auto had a book value of 53.67 million yuan and its equity was evaluated at 172.53 million yuan. The transaction price is set at 170 million yuan, which Xuzhou Machinery will spend to buy a 60% stake in Chunlan Auto on condition that the truck company is not mortgaged and has no 1 million-yuan-plus lawsuit.

Chunlan Auto now has five series of trucks with each series containing lorry, storage/stake truck, container truck, self-unloading truck, semi-trailer towing vehicle and chassis. Most of its models reach the nation's II emission standard and eight models are up to the China III emission standard.

The acquisition will allow Xuzhou Machinery access to the heavy truck industry, copying the development path of global leading equipment makers such as Volvo. The purchase will enrich the listed company's product lineup and also promote the sales of its engineering machinery products.

Meanwhile, Xuzhou Machinery added that the acquired Chunlan Auto will have another name and will not use the "Chunlan" brand, in Chinese or foreign languages, for its products.

Chunlan Auto has seen dramatic loss in its auto business in recent years, reporting losses of 55.1 million yuan in 2007 and 23.2 million yuan in the first half of this year.