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UGG sale highlights still strong Chinese appetite for European technology

By Arno Schuetze 
    FRANKFURT, Jan 10 (Reuters) - Two Chinese groups have 
reached the final round of bidding for Swiss-German machine tool 
maker United Grinding Group (UGG), people close to the matter 
said, signalling still strong Chinese appetite for manufacturing 
technology deals in Europe. 
    Bern-based UGG, owned by Germany's industrial holding 
Koerber AG, makes tools to grind surfaces and small workpieces, 
and is seen fetching around 600 million euros ($720 million), 
the two sources said. 
    At least four groups made it to the final round of bidding 
and they include Chinese sovereign wealth fund CIC's arm China 
Jianyin Investment (JIC), and a joint bid by Chinese machinery 
maker Sinomach  600444.SS  and investor Sino-Ceef. 
    Two others are private equity firm Carlyle  CG.O  and an 
unnamed Western industrial group, the sources said, and final 
bids must be submitted by the end of this month. 
    Koerber and the bidders declined to comment or were not 
immediately available for comment on their interest in UGG. 
    The Chinese interest is the latest sign of unabated demand 
for deals seen as strategic for the country, which are exempted 
from a state clampdown on Chinese foreign investment. 
    That policy reduced Chinese outbound mergers and 
acquisitions by a third last year to $140 billion, according to 
ThomsonReuters data. Mergers and acquisitions experts, however, 
expect that Chinese guidelines issued in November will help 
drive a rebound in outbound deals in 2018. 
 urn:newsml:reuters.com:*:nL4N1OT22D urn:newsml:reuters.com:*:nL4N1N915D 
    The acquisition of German high-tech robot maker Kuka by 
China's Midea  000333.SZ  in 2016 sparked criticism in Germany 
that key technologies were falling into foreign hands just as 
China protects its own companies against foreign takeovers, and 
Germany's takeover code has since been tightened. 
    While intensified scrutiny, including that of U.S. 
regulators, has derailed deals such as the sale of German chip 
maker Aixtron to a Chinese company, deals not touching on 
security issues are seen as unproblematic, dealmakers have said. 
    
    Koerber is separately examining a possible Swiss stock 
market flotation of UGG, sources told Reuters last month. UGG 
expects earnings before interest, tax, depreciation and 
amortisation of around 80 million euros this year and of 
slightly less than that in 2019, according to people familiar 
with the matter.  urn:newsml:reuters.com:*:nL8N1O74P0 
    First round bids came in at 7-7.5 times UGG's expected 2018 
core earnings, the sources said. 
  
 ($1 = 0.8333 euros) 
 
 (Additional reporting by Kane Wu; Editing by Susan Fenton) 
 ((arno.schuetze@thomsonreuters.com; +49.69.7565.1197; Reuters 
Messaging: arno.schuetze.reuters.com@reuters.net)) 
 
Keywords: KOERBER AG M&A/SALE
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