Manz Jumps After Deal to Sell Holding to Shanghai Electric

  • Manz to sell new shares to investors to add Chinese partner
  • Dieter, Ulrike Manz won't participate in capital increase

German machine builder Manz AG jumped as much as 16 percent after announcing plans to sell a stake of at least 29.9 percent to Shanghai Electric Group Co., with the possibility of a full takeover, as the Apple Inc. supplier restructures and raises funds.

Manz will price the new stock “as close as possible to the market,” up to a maximum 40 euros a share, to allow the Chinese company to take a holding, the Reutlingen-based manufacturer said in a statement on Sunday. Depending on the size of the holding Shanghai Electric obtains, the deal may eventually lead to a mandatory buyout offer under German market regulations.

Manz, which produces equipment for the solar industry as well as machines for manufacturing smartphones and tablets, outlined plans in December to cut 174 jobs, or about 10 percent of the workforce, to save 7 million euros ($7.65 million) in costs. The company, which gets more than 60 percent of revenue from China and Taiwan, said at the time that the curtailments were necessary due to “order postponements and cancellations.”

“This news is a major positive as the company will reach an attractive solution for its so far not successful CIGS solar activities,” Malte Schaumann, an analyst at M.M. Warburg in Hamburg, said in a note to clients. “Some important questions remain open, though, such as Shanghai Electric’s detailed plans for the solar-energy storage area.”

Buying Spree

Chinese investors have been on a buying spree, announcing plans to spend more than $77 billion on foreign companies already in 2016 and putting them on track to break records for a third year in a row, according to data compiled by Bloomberg.

Beijing Enterprises Holdings Ltd., the state-controlled conglomerate that sells everything from beer to energy, agreed on Feb. 4 to buy EQT Partners AB for 1.4 billion euros. That was the biggest direct Chinese investment in a German company to date. A day later, the Chicago Stock Exchange said a Chinese investor group agreed to acquire it, giving the buyer entry into the intensely competitive U.S. stock market.

Shanghai Electric’s offer is 7.1 percent higher than Manz’s closing price of 37.35 euros on Friday. The stock climbed as much as 6.06 euros on Monday, the most since Feb. 17, to 43.41 euros and was up 13 percent as of 10:51 a.m. in Frankfurt. The stock has gained 24 percent this year, giving the German company a market value of 231 million euros.

Biggest Owners

Dieter and Ulrike Manz, the two largest shareholders, won’t participate in the capital increase, and Dieter Manz, who is chief executive officer, will retain that position, the manufacturer said. Shanghai Electric and the CEO may agree to coordinate their votes at the annual shareholders meeting, and he may sell enough stock to the Chinese company to push its stake above 30.1 percent, a threshold that would require it to make an offer for full control of the company, Manz said.

“We want, together with Shanghai Electric, to boost sales of our technology in China, above all solar technology,” Dieter Manz said in a telephone interview on Monday. “That’s the motivation for us both: commercializing the technology in China that we spent so much money on developing in Germany. Manz will stay Manz. We will stay an independent company.”

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