LiuGong to Acquire HSW, Dressta

March 24, 2011

LiuGong Machinery, the China-based construction equipment manufacturer, is finalizing plans to acquire HSW (Huta Stalowa Wola) Construction Equipment Division and its distribution subsidiary, Dressta Co.

The acquisition is another bold step in LiuGong’s global growth strategy, says Zeng Guang’an, LiuGong vice chairman and president.

“We are pleased to partner in this agreement with HSW as this provides an excellent opportunity for LiuGong to acquire manufacturing capacity in Europe, as well as technology that will supplement our machine lines,” said Zeng. “This acquisition helps us continue success with our five-year strategy to become a top 10 construction equipment manufacturer.”

When concluded, the acquisition will be LiuGong’s first outright purchase of manufacturing facilities and distribution outside of its domestic market, Zeng said.
Currently LiuGong is one of the largest wheel loader manufacturers in the world with 15% global market share and is the 15th largest construction equipment manufacturer in the world in 2010. LiuGong has 12 product lines, including wheel loaders, bulldozers, backhoes, skid steers, forklifts, graders, excavators, rollers, truck mounted and crawler cranes, and pavers. Last year, LiuGong produced and sold more than 56,500 machines worldwide with production from 16 manufacturing facilities inside and outside of China.

Established in 1937, HSW is well-known for its manufacturing of high-quality crawler dozers at its plant in the Podkarpackie province in southwestern Poland. HSW also produces wheel loaders, side boom pipe layers, and machines customized for landfill applications and logging operations.

Dressta Co. is the exclusive marketer of HSW equipment with offices around the world. Machines are sold under the HSW brand in parts of Eastern Europe, but are sold under the Dressta brand throughout the rest of the world. HSW stock is primarily government-held, with Poland’s State Treasury as the largest stockholder.

“With HSW Dressta, LiuGong acquires proven technology within the bulldozer segment,” said David W. Beatenbough, vice president of research and development for LiuGong, adding that LiuGong will acquire all the patents for technology and designs, for complete machines as well as component technology including undercarriages and driveline components such as axles, transmissions and torque converters.

“HSW is one of only seven manufacturers in the world with a full line of bulldozers. And the machines have a long design history that reaches back to International Harvester, which was an early developer of track-type undercarriages that led to true construction machinery as we know it today. LiuGong will benefit from HSW’s world-class engineering expertise and we’ll gain access to some large, high horsepower machines and advanced driveline component technology,” he added.

LiuGong will also benefit from the reach of HSW Dressta’s distributor and dealer network. This will help Liugong continue to penetrate important markets, Beatenbough added.

LiuGong has already located a plant outside its domestic market, having opened a wheel loader factory in India two years ago. The HSW acquisition gives LiuGong a plant already in operation in Europe close to its customers, with a highly skilled workforce, Beatenbough said.

Financial arrangements for the acquisition will be disclosed when the final agreement is signed, he said. The deal is expected to be finalized by the end of the 2nd quarter, 2011. LiuGong said it will not acquire HSW’s military manufacturing business.