Swiss compressor manufacturer Burckhardt Compression has entered into a MoU to acquire the remaining 40% of Chinese manufacturer Shenyang Yuanda Compressor
The company initially purchased a 60% interest in Shenyang Yuanda Compressor based in Shenyang, China, in March 2016 and both companies have collaborated closely since. To finance the acquisition, Burckhardt Compression plans to issue a bond in the Swiss capital market.
Burckhardt Compression said it will exercise a call option to acquire the remaining 40% interest in November 2020. The move is aimed at extending Burckhardt Compression’s market position in China. The company said it expects to see more than CNY650M (US$717M) in sales as well as stable profit margins.
This year Burckhardt Compression also acquired the global compressor business from The Japan Steel Works Ltd. Since acquiring the initial interest in Shenyang Yuanda Compressor, the company has expanded into more segments of the Chinese market, broadened its product portfolio and gained direct access to a well-established local supply chain.
Since 2019, compressors manufactured by Shenyang Yuanda Compressor have been available in selected export markets through Burckhardt Compression’s sales and distribution channels. Shenyang Yuanda Compressor employs approximately 650 people in China and generated sales of CNY100M (US$110.3M) in 2019.
A new factory in Shenyang which will replace two older factory sites is slated to commence operations at the end of September 2020. The new factory’s production area covers 86,000 m2 on a total land area of 153,000 m2.
Burckhardt Compression said the new facility features 60% more production floor space than the two former sites combined. The land of the current sites will be handed back to the Chinese Government who will then reimburse construction and relocation costs for the new plant.
The new plant marks an investment in the company’s future business development. Operations at the former two locations are being combined at the new site, where workflows and processes have been aligned with the latest standards and best practices to improve operational efficiency even more.
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