CIMC-TianDa enters the deal to acquire 60% stake in China’s fire truck giant Shenyang Jietong
The Hong Kong-listed CIMC-TianDa Holdings announced on July 31 that one of its subsidiaries has entered a deal to acquire a 60% stake in Shenyang Jietong for 600 million yuan. A couple of minutes later, Mr. Zheng Zuhua, Executive Director and CEO of CIMC-TianDa, shared a moment in his WeChat account by saying that.
“Congratulations, CIMC! You have achieved another unbelievable and marvelous milestone. As is known to all, it takes great courage to invest in industrial business and stand up to challenges, yet we have been making solid steps forward thanks to our concerted efforts. In the days, months and years to come, we will continue to champion the craftsmanship spirit, make the business bigger and stronger, and build CIMC into the world’s No. 1 firefighting equipment maker.”
The post received a large number of “likes” from his WeChat followers, indicating that the acquisition is widely recognized as a big move vital for the improvement and further expansion of CIMC’s firefighting equipment business. Also the acquisition heralds the possibility that TianDa and its parent company will seek the first place in a wholly new area in the history of business growth.
The improvement and development of firefighting equipment business is at the top of CIMC’s agenda
In April, CIMC merged its PBB, GSE, MHS and APS businesses with that of the Hong Kong-listed China Fire Safety Enterprise Group Limited (CFE), in an attempt to provide a better and more independent financing platform for the Segment. Thanks to a couple of months’ hard work, the Group increased its equity interest in CFE from 30% to over 50% and changed the name of CFE to CIMC-TianDa Holdings Company Limited (CIMC-TianDa). Mr. Zheng Zuhua, the top leader of the Segment, was elected Executive Director and CEO of CIMC-TianDa.
After the restructuring, CIMC-TianDa continues its growth momentum in tradition businesses. In the meantime, it focuses more on the development of firefighting equipment business.
Prior to the integration, CFE was the first listed company in China’s firefighting equipment industry. In 2015, CFE traded for 40% equity interested held by CIMC in Ziegler, a Germany-based firefighting equipment specialist that became the No. 1 brand on China’s imported firefighting truck market. After the equity replacement, CFE improved its business layout and consolidated its leading position by complementing the business of its subsidiaries Sichuan and Cuilian Firefighting Equipment and that of Ziegler.
The acquisition of Shenyang Jietong is a good buy
The acquisition is another big move and milestone in CIMC’s history, and the two-year acquisition is the first deal of strategic importance finalized by the newly restructured CIMC-TianDa.
Cuilian Firefighting Equipment, a subsidiary of CIMC-TianDa, finalized the deal with a conditional purchase of the 60% stake held by 7 private shareholders in Shenyang Jietong at a price of 600 million yuan.
Shenyang Jietong is also an important player in China’s firefighting equipment industry. The group comprises Shenyang Jietong Fire Truck Co. and Fushun Shunda and Shenyang Ruida, two wholly-controlled fire truck parts and components production subsidiaries.
Founded in 1974, Shenyang Jietong Fire Truck Co. is the major part of the group. It is a well-established producer of elevating platform fire trucks, aerial ladder fire trucks and skylift fire trucks, capable of manufacturing over 80 types of products in all series. As the biggest company in China’s fire truck industry in terms of comprehensive strength and scale, Jietong Fire Truck sells its products to over 30 provinces across the country and a large number of countries and regions in South America, Middle Asia, Southeast Asia and Africa. Currently, the company has two production facilities respectively located in Shenbei New Area and Shenfu New Area, covering a total area of 200,000 m2.
Over the years, the group has made outstanding business performance: it achieved business revenues of 617 million yuan and 654 million yuan in 2016 and 2017 respectively, with after-tax profits of 55.172 million yuan and 65.426 million yuan.
A responsible officer with CIMC-TianDa showed his satisfaction with the transaction, saying that the deal will be able to bring CIMC’s firefighting equipment business to a new level.
In addition to Shenyang Jietong’s powerful comprehensive strength, two other characteristics are vital for the successful finalization of the deal: firstly, the group has the most advanced aerial fire truck technology - the core of the R&D of high-end fire trucks in its hand, which will offer technical complementary inputs to the companies under CIMC-TianDa; secondly, since the geographic patterns matter a great deal for the business success of firefighting equipment makers in China, the group based in the northeastern part of China is a perfect match to CFE’s production facility in Sichuan Province and will improve CIMC-TianDa’s business layout in the north of China.
According to Zheng, CIMC is planning to further expand and strengthen its firefighting equipment business, which has become an important strategy for the upgrading and transformation of its manufacturing businesses. In this context, it is convinced that the acquisition will contribute a great deal to CIMC-TianDa’s full access to the firefighting equipment market and help it develop into a world leading firefighting equipment company.