The world's largest container manufacturer plans to buy a Dutch firm for 82.5 million euros (US$99 million) to expand its product line.
China International Marine Containers (Group) Co Ltd (CIMC) said it would buy Burg Industries BV in a statement to the Shenzhen Stock Exchange yesterday.
The purchase will be made through a new venture formed by CIMC's Hong Kong subsidiary, CIMC Tank Equipment Investment Holdings Company Limited, and the Dutch firm's two shareholders, Peter van der Burg and Cees van der Burg.
The joint venture will be worth 50 million euros (US$60 million). CIMC will hold a 75 per cent stake, with the two shareholders holding the remaining 25 per cent.
The new venture will then buy Burg Industries, which is valued at 110 million euros (US$132 million).
The acquisition will extend the company's product line, according to a statement from CIMC.
The company also said it will benefit from research and product development, skilled labour and production facilities.
Founded in 1937, Burg Industries is well known in Europe as one of the leading suppliers of road transport equipment, containers and special tanks.
Burg Industries' 2004 sales reached 235.84 million euros (US$283 million), according to a statement by CIMC.
According to its quarterly earnings report, in the first nine months of 2005 CIMC's sales reached 25.8 billion yuan (US$3.2 billion).
China's dry cargo container production capacity stands at 4.5 million 20-foot standard containers a year.
Capacity will probably rise to 5.8 million containers in 2007, said the China Container Industry Association.
China has become the world's biggest container producer, making up 70 per cent of the world's total.
Industry analysts say the significant increase in China's container production is because of the rapid development of China's container shipping over the past two decades.
China's container shipping industry has seen 30 per cent growth annually since the early 1990s, partly attributable to the country's rapid development in foreign trade.
In addition, China's ports are now open to more than 140 sea routes, with over 2,500 voyages taken each month.
However, to ease the over-production of containers, factories of the world's leading container producers jointly announced a two-month postponement of production in China.
The period started just before China's Spring Festival, according to the China Container Industry Association
In addition, a number of new production programmes will also be postponed in China to control output, said the association.
Among the participants are CIMC; the world's second-largest producer, Singapore's Singamas Container Holding Limited; the privately-owned CXIC Group Container Company of China; Denmark-based Maersk Container Industri AS (MCI); and the South Korean Jindao Group.