Companies

Shanghai Electric close to sealing deal for US press maker

By Wang Ying (China Daily)
Updated: 2010-06-10 11:19

Company's acquisition of Goss International to help diversify product portfolio, add technology upgrades

SHANGHAI - Shanghai Electric Group Co Ltd (SEG), one of the nation's largest mechanical and electrical equipment manufacturers, will complete the acquisition of US-based press manufacturer Goss International for $1.5 billion on June 15, media reports said on Wednesday.

SEG bought a 40 percent stake in Goss International last September, becoming the second-largest shareholder of the Bolingbrook, Illinois-based company. It will now acquire the remaining 60 percent of the shares in June.

The deal will make Goss International a wholly-owned subsidiary of SEG, according to the Chinese-language newspaper 21 Century Business Herald.

"So far, the merger is well underway," the report quoted a source close to the company as saying.

Shares of SEG edged up 1.87 percent to close at 7.64 yuan in Shanghai on Wednesday.

Unlike most overseas acquisitions that target resources or better branding, SEG's purchase is aimed at product diversification and technology upgrades, said Ding Jianping, a professor at Shanghai University of Finance and Economics.

Xu Jianguo, chairman of SEG, said that the expertise, global infrastructure and innovation of Goss International's world-class team would expand SEG's presence in the printing sector.

Founded in the 1880s, Goss International supplies web-offset presses and finishing systems for newspapers, magazines, catalogs, inserts, direct mail and packaging. The company has development and manufacturing operations in the United States, the Netherlands, France, Japan and China, employing over 4,000 people across nine nations.

Although renowned for its innovative precision printing machines, Goss International lost its sheen with the rapid development of the Internet and new media. But Xu is optimistic about this purchase, saying full ownership of Goss will solidify SEG's position in the print media sector.

"This move will diversify our product portfolio and strengthen our ability to offer innovation, value and security to a wider range of printers and publishers," Xu told the press late last month, who also expressed confidence in the future of print media.

"Print media will continue to thrive, driven by printers and publishers with new ideas and innovative technologies. These companies need a strong supplier with the resources to sustain continuous innovation, exceptional execution and unwavering support over the long term," Xu said.

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Shanghai University's Ding noted that although many overseas acquisitions have been reported, few have proven successful. "Overseas acquisitions give you a shortcut to wider consumer recognition, advanced technology and service. But Chinese companies are at the early stages in buying overseas assets, and thorough market studying is necessary for a successful deal," said Ding.

Media reports have said the acquisition has already obtained approval from the National Development and Reform Commission, the Ministry of Commerce and the State-owned Assets Supervision and Administration Commission.

Shanghai-based SEG is primarily involved in the design, manufacture, sale, and servicing of transmission power generation and distribution equipment. The company also produces elevators, escalators and printing equipment.

SEG, together with its subsidiaries, is one of the nation's largest mechanical and electrical equipment manufacturing groups, and boast 60 manufacturing sites employing more than 40,000 staff.