Another Important Overseas M&A by Zoomlion—Acquisition of M-TEC, No. 1 Dry-mixed Mortar Equipment Brand in the World

On December 25, Zoomlion is going to hold a press conference at Shangri-La Hotel, Beijing to announce the formal acquisition of M-TEC on December 20, the world's No. 1 dry-mixed mortar equipment manufacturer incorporated in Neuenburg of Germany.

This is another important overseas M&A by Zoomlion, another practice of Zoomlion guided by the overseas strategy of "Breakthrough + Significant change = Globalization", and an important step of Zoomlion to continuously strengthen its top brand position in the concrete machinery field through ceaselessly creating preponderance in new businesses such as dry-mixed mortar, etc. Through the high-level engrafting of the M-TEC technology, Zoomlion will also become the world's No. 1 dry-mixed mortar equipment brand.

Operation Breakthrough: Building Systematic Solutions

The press conference will, after the acquisition of CIFA (Italy) by Zoomlion in 2008, present another important overseas acquisition by Zoomlion to the world. M-TEC, the acquiree that was established in 1978, is the world leading supplier of dry-mixed mortar equipment, and its products cover the whole process of dry-mixed mortar production and are available in 55 countries and regions around the world.

In fact, Zoomlion started the research and development of dry-mixed mortar equipment as early as in 2007, thus realizing independent research and manufacture of core parts and components with relevant products launched onto the market. Since entry into the dry-mixed mortar equipment field, Zoomlion has dedicated itself to developing system solutions and providing complete equipment ranging from production, logistics and the entire construction process to provide a market-oriented innovative experience to the users. The shift from a simply equipment manufacturer to a system solution provider requires higher comprehensive research and development capacity and the selection of acquisition of M-TEC is obviously based on its advantage in this aspect.

M-TEC has been leading in the dry-mixed mortar technology with a variety of products covering the entire mortar producing process. It is the only company in the world that is capable of R&D and manufacture of both dry-mixed mortar mixing plant equipment and dry-mixed mortar site equipment. The acquisition of M-TEC will be beneficial to the rapid enhancement of Zoomlion products and its technological competitiveness. Moreover, M-TEC is capable of dry-mixed mortar recipe application and familiar with the mortar production technology and therefore can better satisfy the demand of the Chinese market and customers, thus creating a competitive edge for Zoomlion to seize the domestic market. In respect of key parts, Zoomlion and M-TEC are dedicated to different key fields, therefore, the research, development and manufacture capacity in key parts can be improved after the integration.

Analysts pointed out that the acquisition of M-TEC, the No. 1 dry-mixed mortar equipment brand in the world, will significantly enhance the brand popularity of Zoomlion in this field and their complementary distribution channels will help Zoomlion to expand its dry-mixed mortar equipment business to the entire world.

Innovation and Change: Sources of Industrial Upgrading and Development

Recently, at the Conference of Global Manufacturers of Construction Machinery & Top 50 Forum, Mr. Zhan Chunxin, Chairman of Zoomlion pointed out that innovation is the source of vitality for the sustainable development of construction machinery enterprises, and in particular, in the innovation of product portfolio, construction machinery enterprises must identify new market trends, develop new products, and find new market growth points.

In the present difficult transition period when the construction machinery industry is facing a surplus of productivity, whoever first makes a breakthrough in innovative businesses will continue to develop. In recent years, Zoomlion Concrete Machinery Branch Company, in its pursuit of strategic transformation, has preemptively launched a series of innovative products that represent the future direction of the industry, such as the machine-made sand equipment, the dry-mixed mortar complete equipment, and the continuous gradation mixing plant equipment. In fact, the exploration in the field of dry-mixed mortar equipment epitomizes the structural adjustment and industrial upgrading of Zoomlion.

According to Mr. Chen Xiaofei, Vice President of Zoomlion and General Manager of Zoomlion Concrete Machinery Branch Company, Zoomlion has chosen to enter the field of dry-mixed mortar equipment based on its prediction and judgment of the industrial transformation and upgrading direction and the market development trend. As a new type of building material that can be widely used in construction projects, the dry-mixed mortar has been better developed in some European and American countries. Following its promotion of commercial concrete, China is now starting to further its environmental protection drive by promoting dry-mixed mortar. As predicted by industrial experts, the center of the global dry-mixed mortar market will gradually shift to Asia, and by 2017 the Asian market's annual demand for dry-mixed mortar will account for 74 % of the global demand. In China, the dry-mixed mortar market is entering a fast-growing period, and it is expected that by 2017 the demand for dry-mixed mortar will have reached 190 million tons in the whole country. In the next five years, China's demand for dry-mixed mortar equipment will grow rapidly at an annual growth rate of over 70 %.

We can say that it is an irresistible trend to promote and develop dry-mixed mortar, because it not only represents the direction of economic and industrial development, but also is in line with the national environmental protection strategy. In the next few years, the promotion of dry-mixed mortar and dry-mixed mortar equipment will comprehensively upgrade construction quality while eliminating the serious pollution caused by the current on-site mortar mixing practice.

The Gambit is Completed: A New Chapter of Our Global Strategy

To understand the significance of this acquisition, we need to recall the global M&A process of Zoomlion. At the press conference, Zoomlion Vice President He Wenjin said: In the process of making itself bigger and stronger, Zoomlion has established the "Breakthrough + Significant change" development strategy, i.e. to achieve breakthrough-like professional development through the division system and to achieve significant change-like development through M&As and other extensional expansions. Starting 2001, Zoomlion has successively acquired Powermole (UK), Puyuan Engineering Co.,Ltd, Shaanxi Xin Huanggong Machinery Co., Ltd. and CIFA (Italy). In particular, the M&A of CIFA drew global attention and enhanced Zoomlion's status as the world's largest concrete machinery manufacturer, which was used for case study by Harvard Business School. In 2011, Zoomlion purchased the whole set of technology of JOST, the father of German flat-top tower cranes and the world's tower crane design standard maker, thus achieving the seamless integration of Zoomlion's tower crane technology with international standards and converting itself from a China-leading tower crane manufacturer to a world-leading tower crane manufacturer. This dazzling series of M&As has greatly enriched the Zoomlion product lineup and enhanced the Zoomlion brand value, and such rapid expansion has proven the strong ability of Zoomlion in integrating resources.

The continuous M&As have made Zoomlion a veritable M&A master. On the basis of its thinking and practice in the process of M&As, Zoomlion has summed up five basic principles for Chinese enterprises' cross-border M&As: Inclusiveness, Sharing, Responsibility, Rules, and Cooperation. Mr. Zhan Chunxin, Chairman of Zoomlion, said: "Chinese enterprises need to not only go global but get globally involved as well. ‘Going global' is more than selling products abroad, sending people abroad, and setting up plants abroad. We still need to get involved in the global industrial ecology as a world-class enterprise jointly supported by different nations, different countries, and different cultures."

The acquisition of M-TEC is another important globalization effort by Zoomlion, marking its determination to becomeNo.1 dry-mixed mortar equipment brand in the world.