Chinese Money
According to sources in the finance and investment industry on November 8, senior officials of the S&C Engine Group are scheduled to visit Korean agricultural machinery manufacturers and discuss M&A deals during November. If a deal is finalized, it will be the first case in which a Chinese company listed in the Korean stock market purchases a Korean firm.
So far this year, Chinese companies have acquired local fashion brands in Korea such as INTERCREW and gaming companies such as Identity Games. The Industrial and Commercial Bank of China, the largest bank in the world, was recently reported to weigh its options in Woori Bank’s sale, which attracted a lot of attention.
The biggest reason for Chinese interests in buying Korean firms lies in high technology. The S&C Engine Group is likely to be under favorable conditions for an M&A, since Korean agricultural machinery manufacturers with sufficient technology are in heated competition due to the dwindling local market.
In 2009, the Chinese company went public in the KOSDAQ. The S&C Engine Group mainly produces gears, auto parts, motorcycles, and lawn mowers, and recorded 197.9 billion won (US$185.4 million) in sales and 49.5 billion won (US$46.4 million) in operating profits last year.
The global agricultural machinery market is worth 132 trillion won (US$124 billion). China represents 60% of the total market, and the Chinese agricultural machinery market shows 25% of its annual growth.