Goldman, KKR in talks with Chinese firm over Kion stake sale

The deal is expected to be worth EUR700-800 million ($880 million to $1 billion) - implying an enterprise valuation of about EUR5.5 billion - which would make it the largest ever investment in Germany. It comes after Sany Heavy Industry, a Chinese construction equipment manufacturer, and CITIC Private Equity agreed to pay EUR360 million plus debt for Putzmeister, a German company that makes high-tech concrete pumps, in January.

Manager Magazin, a German publication, first reported the news on Thursday. According to subsequent reports by other media, negotiations between the parties have been underway for some time. They are on course to sign an agreement by the end of the month.

For Shandong Heavy, which makes products including bulldozers and heavy-duty gearboxes, the deal offers access to Kion's truck technology. Kion, meanwhile, is said to face a large round of debt refinancing next year.

The German company employs 22,000 people and recorded sales of EUR4.4 billion last year and earnings of EUR365 million. It is the market leader for forklift trucks, warehouse equipment and other industrial trucks in Europe. The company is also the largest foreign manufacturer of forklift trucks in China, having acquired the local Baoli brand in 2009.

Goldman and KKR bought Kion in 2006 from German group Linde, placing an enterprise valuation on the company of around EUR4 billion - EUR2.6 billion in debt, EUR300 million in pension liabilities and EUR1 billion in equity, the Financial Times reported. The private equity investors put up a further EUR100 million in 2009.

The preferred exit route remains an IPO, although the timing is uncertain.

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