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Finnish Automotive Supplier PKC Establishes China JV.


29 March 2016 - Finnish vehicle electrical systems maker PKC Group plc has signed a joint venture contract with Anhui Jianghuai Automobile Co., Ltd's Hefei Jianghuai Automobile Co., Ltd subsidiary, the group said.

The joint venture will comprise current wiring harness business of JAC group with the aim to gradually take-over also other, currently outsourced, wiring systems business.

PKC said the joint venture will increase the group's market share in in China in both medium and heavy duty truck segments by five percentage points and expand business to buses, light trucks, vans, pick -up trucks and various other light vehicles.

JAC's current wiring harness buy is appr. RMB 1000m p.a. (appr. EUR 140m p.a. at current exchange rate).

The parties' aim is to develop JV as a primary supplier for all wiring harnesses to JAC group. The joint venture will deliver full design and development, manufacturing and sequence delivery services to JAC group companies.

JAC's total sales in 2015 consisted of 588 thousand vehicles and revenue of RMB 47bn (appr. EUR 6.5bn at current exchange rate).

The 50/50 joint venture is accomplished through a new company that will be established by Hefei JAC and PKC in city of Hefei in Anhui province in China with an equity value of RMB 100m (EUR 14m at current exchange rate).

PKC will contribute RMB 50m (USD 7.89m) via equity to be financed from PKC's cash resources. The JV agreement contains specific terms regarding PKC's right to consolidate.

The finalisation of the joint venture is subject to usual conditions including e.g. negotiating the related agreements and obtaining authority approvals.

This finalisation is targeted in the second half of 2016, and the joint venture will be consolidated to PKC Group as of the date of starting the operations.

The joint venture is estimated to generate approximately RMB 350m (appr. EUR 50m at current exchange rate) revenue and employ about 1000 people in its first 12 months of operation.

It is estimated not to have a significant impact yet on PKC Group's 2016 result.

PKC Group is a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry, rolling stock manufacturers and other selected segments.

The group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbia and the USA. The group's revenue in 2015 totalled EUR 908m.

Country: China

Sector: Motor Vehicles

Target: Wiring harness JV

Buyer: PKC Group plc

Vendor: Hefei Jianghuai Automobile Co

Deal size in USD: 7.89m

Type: JV

Financing: Cash

Status: Agreed

Buyer advisor: , ,


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Publication:M & A Navigator
Geographic Code:9CHIN
Date:Mar 29, 2016
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