Freshfields and Hengeler advise on ChemChina’s $1bn Germany acquisition

Freshfields Bruckhaus Deringer and Hengeler Mueller have taken lead roles in the $1bn (€925m) acquisition of German industrial machinery maker KraussMaffei Group by a Chinese consortium led by state-owned China National Chemical Corp (ChemChina).

Freshfields’ team, led by Frankfurt corporate partner Heiner Braun, has advised ChemChina on this deal, which is believed to be the largest-ever Chinese acquisition of a Germany company.

Chinese firm Zhong Lun, led by Shanghai international partner Carl Cheng who was a former Freshfields partner, provided the state-owned group with PRC law advice.

The ChemChina-led consortium, which also includes Guoxin International Investment Corp and private equity firm AGIC Capital, has agreed to buy KraussMaffei from Canada’s Onex Corp for a total of €925m.

Onex sought out German firm Hengeler Mueller and Chinese firm Fangda Partners for advice in this record-breaking transaction. Hengeler’s team was headed by Düsseldorf-based corporate partners Thomas Meurer and Reinhold Ernst, and worked together with Fangda’s Shanghai partner George Xu.

KraussMaffei was advised by its in-house team led by head of legal Markus Hunger.

“The relationship between the German economy and Chinese economy is very tight and there are many overlaps. We’ve expected for years to see major investments from China. It’s good to see this major transaction in Germany’s technology sector and we’ve brought it across the finish line,” said Meurer.

Chinese companies have shown growing interest in acquiring technologies, well-known brands and established distribution networks in Europe. In 2012, Chinese group automotive and equipment manufacturing company Weichai Power acquired a stake in German forklift truck maker Kion Group for €738m. In that transaction,King & Wood Mallesons, Hengeler Mueller and Paul Hastings advised the Chinese buyer, while Kion Group was represented by Freshfields and Gleiss Lutz.

Driven by the growing ties between the two markets, Hengeler opened its first China office in Shanghai in 2013.

Background to this deal

ChemChina has been an active investor in Europe. Another major acquisition the group did recently was the $7.7bn acquisition of Italian tire-maker Pirelli. In this deal, which was announced in March 2015, ChemChina was advised by Clifford Chance, Italian firm Studio Legale Pedersoli e Associati and Chinese firm Jun He.

Freshfields has also previously advised ChemChina on its outbound transactions. In 2010, the firm acted for the Chinese group on its $1.44bn acquisition of a controlling stake in Israel’s Makhteshim Agan Industries. Frankfurt-based Heiner Braun worked with the client during his time as Freshfields’ Shanghai managing partner between 2007 and 2013.

Hengeler has a long-lasting relationship with the KraussMaffei Group and has advised on a number of major transactions involving the group. In 2012, it represented Madison Capital Partners on sale of KraussMaffei to Onex. Onex was advised by Latham & Watkins in the 2012 deal. Düsseldorf-based Meurer and Reinhold are two key relationship partners with KraussMaffei and Onex.