K-Tron International Inc. has signed a definitive agreement to acquire certain assets of Wuxi Chenghao Machinery Co. Ltd. (Wuxi Chenghao), a privately held company that is one of the leading feeder and ancillary equipment manufacturers for the plastics compounding and injection industries in the People’s Republic of China (PRC).
The total cost of the transaction over a five-year period, including the purchase price and payments under related employment and other arrangements with Wuxi Chenghao’s current owner, could be as much as $3.5 million. The acquisition is expected to close early in 2007 and is subject to various closing conditions, including certain required governmental approvals in the PRC.
Wuxi Chenghao is located in Luoshe Key Open Industrial Park, Wuxi City, in the Huishan district of Jiangsu province, approximately 60 miles west of Shanghai. The company designs, manufactures, markets, and services volumetric and gravimetric single and twin screw feeders and controls, vibratory trays, pelletizers, and pneumatic screen changers for use in plastics compounding and injection molding processes. With approximately 60 employees, it was founded in 2002 and has established a leading position in the domestic PRC market for industrial feeders. K-Tron expects to obtain approval to form a Wholly-Foreign Owned Entity (WFOE) under PRC laws that will purchase certain assets from Wuxi Chenghao and serve as the entity to conduct the business following the closing.
“The acquisition of Wuxi Chenghao will be a major step forward in K-Tron’s strategic plan to expand our global leadership position in feeding and pneumatic conveying equipment for difficult-to-handle materials,” said K-Tron Chairman and Chief Executive Officer Edward B. Cloues II. “K-Tron has served the upper-tier PRC market for many years by selling this equipment primarily to multinational end users through resellers in Europe and the United States, through independent representatives in the PRC and by providing support through our Representative Office in Shanghai which we established in 1996. The domestic PRC market for plastics processing equipment is growing at double-digit rates, and this acquisition will enable us to address the domestic customer base with products designed and manufactured in the PRC and sold in local currency.”