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£582m China-Germany business deal looks to be a boost for legal jobs

Posted by: Laurence Simons 05/09/12

Eclectic legal team required to oversee the negotiations.

Let's put on our business suits and talk business: Chinese automotive company and equipment manufacturer Weichai Power Co Ltd has dropped £582 million (€738 million / $928 million) on a 25 per cent steak in German forklift truck maker Kion, also snapping up a 70 per cent stake in the firm's hydraulics business. And when a Chinese firm drops £582 million and €738 million and $928 million on a 25 per cent stake in a German engineering firm as well as a 70 per cent section of their hydraulics business, you have to get a load of lawyers on board. Because that stuff is complicated. \

Why is Kion hawking a 25 per cent stake of its business around China? Two reasons, mainly: firstly, the firm is looking to raise capital around the €700 to €800 million mark, and secondly it wants to use that capital to expand into growing markets such as the one that is going on in China. That's why the negotiations - some months in the making, and slowly advancing towards a climax - seem to suit both parties. Weichai gets to make the biggest investment a Chinese firm has ever made in a German market, and Kion gets either some dollars, pounds or euros to go and play hydraulics with. Win-win.

But with China and Germany being notoriously 'not the same country', it takes a pretty eclectic legal team to iron such negotiations out. And, well, that's just what they've got. Weichai Power has recruited Paul Hastings, King & Wood Mallesons and German law firm Hengeler Mueller to advise on the acquisition, while Kion has recruited Magic Circle firm Freshfields Bruckhaus Deringer and German specialists Gleiss Lutz to talk money and percentage shares on behalf of them.

The Paul Hastings team was led by a number of Frankfurt-based partners, with Christopher Wolff, Regina Engelstader, Ali Sahin and Jan Gernoth joining real estate expert Jochen Scheel and capital markets guru Karl Balz as part of the negotiations. Jeffrey Chen, who heads up the in-house legal jobs at Weichei, worked closely with all three firms. And both companies seemed pretty pleased with the deal.

"This partnership is an important step in our five-year strategy to globalise and expand our business activities into new markets and products," said Weichai Power chair Tan Xuguang.

"Our products, regional market positions and technologies complement each other perfectly," said Kion chief executive Gordon Riske.