When the storm caused by Gree has not subsided, another nuclear-bomb-level M&A transaction was exposed in North China, and the two major fronts, one south and one north, were detonated one after another, making the defense of China's own brands enter the stage of life and death.

Compared to Gree, the deal in the north is more palpitating.

XCMG, known as "China's No. 1 Manufacturing", decided to sell 85% of its shares to Carlyle Capital, an American investment group, at a price of 2 billion yuan!

Like a thunderstorm on the ground, the first manufacturing in China in the past will soon become the first manufacturing in the United States, and the agreement has been signed in black and white, which makes many industry experts shout out "Half of China's equipment manufacturing industry has fallen!"

XCMG is the largest state-owned super-large enterprise in the domestic construction machinery industry, with the most complete product varieties and series, and many equipment used on infrastructure construction sites are produced by XCMG. Star products include excavators, cranes, bulldozers, pump trucks, mixer trucks, etc., which are vividly compared to the screws of a country's infrastructure.

By the end of 2005, China's construction machinery market showed a three-legged trend.

The leading foreign giants represented by Caterpillar and Volvo are well-known on the construction site for their high-quality imported products and occupy the high-end market. It was followed by large state-owned enterprises represented by XCMG and Liugong, which relied on traditional advantages to occupy the mid-end market. In addition, the private machinery enterprises led by Sany Heavy Industry, starting from the low-end market, they have developed rapidly and began to continue to encroach on the market share of state-owned enterprises.

Although the three forces competed with each other, they basically maintained a stable pattern. Now, once XCMG disarms and surrenders, then Liugong and other state-owned enterprises will also become targets of foreign investment, and in the future, China's mechanical engineering industry will become a situation in which foreign capital is "one dominant force"! In the face of strong foreign capital, weak private enterprises such as Sany Heavy Industry are simply unable to parry.

In the context of the Chinese government's continuous investment in infrastructure to drive economic growth, especially industrialization and urbanization have become inevitable trends, XCMG, which is mainly engaged in infrastructure equipment manufacturing in the sunrise industry, wants to sell itself, which is really an unimaginable situation!

"XCMG XCMG, help you succeed", this advertising slogan is full of local Chinese characteristics, but now it needs American capital to help it succeed.

Why is XCMG selling to the outside world?

The main reason is the lack of capital, there is not enough capital to reinvest, and the company hopes to introduce strategic investors to solve the financial dilemma.

In 2005, XCMG expects sales revenue to reach 13 billion, accounting for 20% of the local government's GDP, and the group's total assets are 7.2 billion.

Although XCMG is large, the enterprise is bloated, and the annual profit is not as good as that of Sany Heavy Industry, a private enterprise with sales of only half of its own. Under the call of state-owned enterprise reform, local governments are ready to shake off this burden and solicit strategic investors from all over the world.

In the accounts, XCMG listed companies belong to the profit model, but looking at the entire group, in fact, XCMG has been losing money for 3 consecutive years, which makes the local government make a painful move.

China's largest mechanical engineering manufacturer wants to sell, which naturally attracts many enterprises and capital competition. Not only the world's No. 1 Caterpillar came, but even Sany Heavy Industry, a rising star in the domestic private sector, boldly participated in the competition.

Whoever can swallow XCMG will be able to become the overlord of China's machinery industry in one fell swoop, especially the domestic infrastructure industry has shown signs of recovery, and smart people know that this is a sure deal.

The local government also knew, but after a risk assessment, they felt that selling XCMG was a good option. Like Gree, in addition to throwing off the burden, it can also attract investment to attract large investors.

In addition to the loss of equity appreciation income, tax and employment remain unchanged, and it can also get rid of the burden of 20,000 workers on the head of the government, at least in the future, the unemployment of workers will be counted on the heads of Americans, which is a rational choice made by the local government of the economy.

The door of the Chinese market is wide open, of course, attracting global capital to buy the bottom, especially the foreign dollar into China is hard currency, and investment is a super cost-effective deal. In the United States, 300 million US dollars can only be enough for the construction cost of a production line, but when you come to China, you can acquire a leading machinery enterprise, which is the advantage of developed country capital over backward country capital.

In addition to Caterpillar, Carlyle Capital, Warp Pincus, Citigroup, AIG, **** and other U.S. investment institutions have also signed up, revealing with the naked truth that U.S. capital is buying the Chinese market on a large scale.

Since it is natural for local governments to favor hard currencies such as US dollars in the hands of foreign investors, private enterprises such as Sany Heavy Industry were first excluded from the list of intentions due to their lack of strength.

It stands to reason that Caterpillar is the most suitable candidate because of the industry's counterpart, advanced technology, and deep pockets. Among so many bidders, Caterpillar is a very small number of people engaged in industry, and the rest are financial investment institutions.

However, Caterpillar overestimated its own strength, believing that other financial capital did not have the confidence to compete with itself, and did not agree to keep the "XCMG" brand, but was ready to use XCMG as a foundry to promote the Caterpillar brand. In addition, it also calls for large-scale layoffs of corporate employees, after all, 20,000 workers create 13 billion yuan of output value, which is very inefficient in the eyes of Americans. By their standards, the 5,000-worker quota is already the biggest concession for the U.S. side, requiring the Chinese government to cover the cost of unemployment for 15,000 workers.

Such a requirement is a big taboo in attracting investment in China, and layoffs and abandonment of their own brands are the bottom line that local governments dare not blatantly touch.

In addition, XCMG was cheated by Caterpillar once many years ago. Ten years ago, the two companies jointly invested $82 million to establish a joint venture to produce excavators, in which XCMG has a 40% stake. Later, the company continued to lose money inexplicably, relying on technical advantages and the management power was in the hands of foreign parties, which required continuous additional investment. I thought that the investment would usher in returns, but I didn't expect that I couldn't make ends meet, and XCMG was burdened with a heavy burden. When additional investment was needed, XCMG had no money to invest, so it could only sell 40% of its shares to the United States at a discount, and the joint venture factory became wholly owned by the United States, making a wedding dress for Caterpillar's localization.

On the contrary, Carlyle Capital recognized the ambivalence of local governments eager to attract investment, get rid of the burden of state-owned enterprises, and want to introduce large projects to retain local brands, and proposed a plan of "retaining the brand, registering in China, and basically stabilizing the core management team and workforce", and finally won among many competitors. Moreover, they also proposed to assist XCMG in building engine and commercial vehicle projects, continue to open up the entire industrial chain, and win the favor of local governments.

When the Gree turmoil gradually rose, the two parties in the XCMG merger and acquisition case smelled a bad atmosphere, so they both accelerated the pace of negotiations and finally formally signed the agreement. Carlyle Capital will acquire 85% of the equity of XCMG Group for RMB 2 billion, and in the future, XCMG will be listed overseas to seek investment returns, and XCMG will have the right of first refusal to repurchase when the investment is withdrawn.

Carlyle estimates internally that after the injection of capital into the future after packaging, only in the name of "Made in China", coupled with the endorsement of American capital, can obtain at least 100% return on investment.

Unlike the short-sightedness of local governments, Carlyle Capital hired Chinese and foreign experts who are familiar with China's national conditions to conduct various exhaustive analyses of profitable industries when they came to China, and concluded that buying China is a low-risk business with great profits.

"This is a win-win cooperation of 'building the XCMG brand with dollars', and it can also be said to be an extension of the road to saving the country. Carlyle promises not to interfere with the normal operation of our enterprise, only to supervise the financial aspect, and at the same time cooperate with the restructuring of our state-owned enterprises to form a market-oriented business model, which is an ideal partner recognized by employees, management and local governments!"

When the agreement was finally signed, the CEO of XCMG finally breathed a sigh of relief in an interview with reporters. They completed the merger and acquisition agreement before the Gree shock wave arrived at XCMG, and the raw rice was cooked in black and white, and no matter how much discussion was encountered, it could not change the fait accompli.

Gree, which only makes air conditioners, can attract such multimedia if it is sold, and XCMG, which is even more unusual, will definitely usher in a fierce artillery attack. This is one of the reasons why XCMG, Carlyle and the local government tacitly and quickly pushed forward with the negotiation process.

"The Chinese government has fulfilled its promise to ease market access when they joined TO, XCMG is a leading enterprise in China's machinery sector, and Carlyle's successful acquisition of the other party is an ice-breaking move by international private capital to acquire the equity of large state-owned enterprises in China, which will provide a new direction for the reform of China's state-owned enterprises!"

Carlyle's success is a testament to China's success as one of the best investment countries in the world, and the Chinese government protects the legitimate rights and interests of foreign investors. ”

A mainstream Western media outlet that reported on Carlyle's successful acquisition of XCMG sang the praises of such a move, calling it a big event that could be included in the best merger and acquisition of the year. As can be seen from the article report, foreign capital has taken a keen interest in the reform of China's huge large state-owned enterprises.

Even though XCMG and the local government wanted to keep a low profile, under the hype of the Western media, the news that XCMG was successfully sold to an American investment institution for 2 billion yuan finally began to ferment, and the limelight soon surpassed the Gree Group in the south.

At this time, everyone found out that compared with Gree, XCMG is an independent brand that should be more protected.

Building roads and bridges to build high-rise buildings all require XCMG's mechanical products, which are more related to the country's economic security than Gree.

In the future, all machinery products on the construction site in China will be branded with the Americans, so why is the evil result that even primary school students know about it realized?

"The existing national policy stipulates that except for the shield machine, the remaining mechanical engineering products do not involve national security.

Excavators, cranes, bulldozers, etc., like cars, belong to the daily use of engineering products, and the state has not included them in the field of safety strategy.

Therefore, our sale is a normal corporate behavior, and the profits of employees, enterprises and local governments have not been damaged, which is a win-win choice. ”

The paper can't hold the fire, and the media have gone north to XCMG for interviews, and a spokesman for XCMG said the above remarks about whether packing and selling to Americans endangers national security.

As soon as this remark came out, it immediately caused an uproar in the media, you must know that the state in the automotive field is very tightly controlled, and the share of 50% of the equity ratio cannot be broken, and XCMG directly sold 85% of the equity, which is equivalent to giving up its fate to the Americans.

Compared with Ma Daku's Caterpillar, Carlyle Capital is much smarter, and they promised to give 3% of the equity to the existing management of XCMG as an incentive, and the actual market value is at least 100 million yuan. You must know that the current monthly salary of senior executives of state-owned enterprises is more than 2,000 yuan, and the reward of 100 million yuan is a direct income that everyone cannot struggle for in their lives.

It's easy to see why Carlyle was able to give the green light all the way to the XCMG merger, get strong support from management, and eventually eliminate all other competitors.

There is no loss to employees, enterprises, and local governments after the merger, and there is no loss to the Americans, so who loses?

Of course, the country is at a loss, and in the future China's mechanical engineering industry will be controlled by the Americans.

The news that XCMG sold himself privately to the Americans was not only opposed by public opinion, but also protested loudly by domestic counterparts.

First, in the future, foreign capital will dominate, and the weak domestic independent brands will have no ability to resist and will be all strangled. The second is that everyone saw that XCMG sold itself for 2 billion yuan, which was actually a big piece of fat, and they all wanted to come up and take a bite.

"Multinational companies are not only trying to integrate the Chinese market, but also to 'integrate' the Chinese market and resources from the perspective of the global industrial chain, and incorporate China's equipment manufacturing industry into their global industrial chain to ensure their absolute advantage in the global market.

In the future, foreign companies will firmly control the high-end, while China can only become a processing workshop and become the lowest end of the industrial chain!

In fact, this is also the world economic pattern dominated by the United States and Western countries, which rely on capital and technology to control the high-end, and let emerging countries such as China bear the responsibility of maintaining low-end market production, so that they can occupy the field of high-profit financial capital. ”

Hu Yiming pointed to this problem and hit the nail on the head.

Han Hao, who originally focused on automobiles, didn't have much idea about the field of machinery industry, but after winning Yuchai, his thinking has changed.

The diesel engine produced by Yuchai can be seamlessly connected to many mechanical products of XCMG Group, with Yuchai, and then win XCMG, then it can instantly open up the industrial chain and become the new overlord of China's mechanical engineering industry.

Because, even if XCMG signs an agreement with Carlyle Capital, it still needs to be finalized by the Chinese Ministry of Commerce.

Amid the opposition of public opinion, Han Hao received news from reliable sources that the deal would not be approved, which means that many companies, including Zhonghua Group, will have the opportunity to re-buy XCMG.