July 12, 2010

Faegre & Benson Advises New Chinese Client on First European Acquisition

International law firm Faegre & Benson LLP has advised new client Chongqing Machinery & Electric Co. Ltd. (HKEX:02722) ("CQME") on its £20 million acquisition of Lancashire based Holroyd Precision Limited and certain other subsidiaries of Precision Technologies Group.


CQME, which is incorporated in China and traded on the Hong Kong Stock Exchange, is headquartered in Chongqing which is the largest city in the world with a population of over 31 million. A major supplier of commercial vehicle parts and components to the automotive industry worldwide, CQME recorded a turnover of RMB6,893 million (approximately GBP678 million) in 2009.


CQME is committed to significant investment in research and development and its new subsidiaries are firmly at the forefront of high precision machine tool design, build and supply. The group's machines produce ultra precision components in a diverse range of industries, including aerospace, oil and gas and high-end automotive, under prestigious brand names such as Binns & Berry, Holroyd and Crawford Swift.


The Faegre team was led by corporate partner Melanie Wadsworth, working with associate Oliver Staple, and included Alex Denny and Catrin Jennett (Employment) and John Duffy and Kathryn Dowsett (Property). Valuable support was provided by Yiqiang Li, Sherry Zhang and Amy Tan in Faegre's Shanghai office.


Professor Guy Liu of Brunel University acted as acquisition advisor to CQME, coordinating the due diligence process and playing an essential role in facilitating negotiations.


Accounting and valuation advice was provided to CQME by Ernst & Young, BDO Stoy Hayward and Deloittes. The vendors were represented by Macfarlanes.


Xie Hua Jun, executive director and Chairman of CQME, commented:


"This is the first European acquisition for CQME and we feel this investment succeeds in creating a win-win situation for both Chongqing's industry and the UK manufacturing industry in terms of business growth. The combined advantages of the Chinese and UK companies will bring synergies for us, helping to strengthen our competitiveness in machine tool manufacturing. This acquisition would not have been possible without the support of our lawyers and financial institutions in London. We appreciate this support and help, and hope that they will continue to play a key role in promoting CQME's internationalization and also that of other Chinese companies."


Melanie Wadsworth commented:


"Many Chinese companies are seeking to expand their businesses outside China, but so far relatively few have done so in the UK by way of acquisition. This transaction reflects China's ever greater influence in the world, as its most successful companies increasingly make their mark at an international level.


This is the first time we have acted for CQME and we are honoured to have worked with them on this significant acquisition. The commitment of CQME's management team to getting this deal done and ensuring the best possible outcome for all parties was truly impressive. The opportunities for the combined businesses are very exciting and we look forward to continuing to work with CQME as it develops its overseas operations."

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