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Palfinger and Sany to unravel cross shareholdings

Austrian crane and aerial lift manufacturer Palfinger is negotiating to end the cross shareholding deal it has with Chinese manufacturer Sany heavy industries.

If all goes according to plan Palfinger will sell its 7.5 percent stake in Sany Automobile Hoisting Machinery back to the Sany group, in return for the opportunity to do the same with the 7.5 percent stake that Sany Germany holds in Palfinger.

The basis for the deal is that the total capital inflows resulting from the cross shareholding are agreed to be the same for both parties, based on Palfinger’s shares being worth €31.35 a share at the time the full detail of the possible deal is concluded.

The transaction will have no impact on the operational joint ventures between the two companies which will continue as before. The deal will require approval of both companies’ boards.

Vertikal Comment

The two companies entered into their first deal in 2012 along with the establishment of two 50/50 joint ventures, one covering loader crane sales and developments in China, the other covering mobile crane sales in the greater European region, neither of which have really been a raging success, as is so often the case. Just over six months later they ramped up the deal by agreeing to purchase a 10 percent stake in each other’s companies. See: Sany and Palfinger to expand partnership and Palfigner and Sany team up.

At the time it looked as though the agreements we a slow long term move towards the Chinese company acquiring Palfinger. Clearly if that was the case it has not worked out. Untangling the transaction makes good sense for both businesses. Perhaps they also need to cast their eyes over the joint ventures?