German Klöckner-Werke (filling & packaging systems) acquires majority interest in Chinese market leader

Klöckner-Werke AG ( http://www.kloecknerwerke.de/en ) acquires major-ity interest in Chinese Company through its subsidiary KHS - consistently recognizing the significance of the Asian market.

Siegle, Hu & Partners International assisted Klöckner-Werke with this the transaction. From initial negotiations to post-merger business growth plans, SHP was integrated in each step of the process.

Klöckner-Werke AG has strengthened its presence in China and Asia through its most important subsidiary, KHS AG, an international manufac-turer of filling and packaging systems for the beverage, food, and nonfood sectors, by acquiring the majority interest in the Chinese Guangdong Light Industrial Machinery Plant 2 Ltd (GLM2). The relevant contracts have been signed. The transaction is expected to be concluded within the next few months after the required government approvals have been obtained. The former private owners sold their 70% share of GLM2 to KHS. Equal shares of the remaining 30% will remain in the hands of the two managing own-ers who will continue to be members of the company management.

By acquiring GLM2, Klöckner-Werke and its subsidiary, KHS AG, once again point the way to the future in the Asian market. KHS just recently increased its participation in the Indian joint venture to 89%. In addition, construction of a new KHS plant in India is soon to be completed.

Its stepped up involvement on the Asian continent is in line with the Klöckner Group"s concrete objectives and emphasizes its global strategic orientation. This expansion will be reflected in figures in the positive de-velopment of the group right from the beginning.

As a manufacturer of filling and packing equipment, GLM2 with headquar-ters in Shantou, in the province of Guangdong is ideally positioned in the Chinese and Asian market. With a sales volume of more than EUR30 mil-lion, GLM2 is one of the market leaders in this branch of industry in China and has an extensive network in China and Asia. GLM2"s list of customers include big names in the brewing trade such as Tsingtao, C.R.B., Yanjing, Kingway, Harbin, Asian Pacific, San Miguel, Chonqing, Lion, Jingxing, Hei-neken, and Anheuser-Busch.

"For GLM2, the close partnership with KHS AG represents a milestone in the development of the company and opens up tremendous opportunities for both partners in Asian growth markets, China in particular," said Zheng Jiannong GLM2"s Managing Owner.

Valentin Reisgen, Chief Executive Officer of Klöckner-Werke AG and KHS AG: "This partnership largely concludes the development of our interna-tional production network. The local presence continually called for by our global customers is now achieved by our plants in North and South Amer-ica, India, and China in addition to our locations in Germany. We are con-vinced that with this acquisition we are now well prepared for the future globalization requirements in our branch of industry. With this move, we will continue to be one of the leaders of the market in the growth region of Asia."

The figures substantiate the fact that with this new investment in China, KHS has consistently oriented itself to market requirements. In 2005, ap-proximately 80% of the demand for packing machines in the Chinese market, which will increase from about EUR 390 million (2002) to nearly EUR 900 million (2010), was satisfied locally. The extent of the demand for modern technical solutions in the future for the beverage sector is il-lustrated, for instance, by the current yearly beer consumption of 18.8 li-ters per capita. A high backlog demand is apparent. Experts in the beer sector expect that China will effect 50% of the worldwide increase in de-mand for beer within the next ten years.

In the future, GLM2, like all companies of the Klöckner Group, will orient itself to the international standards and maxims of Klöckner-Werke AG.

About Klöckner-Werke AG

Klöckner-Werke AG is a holding company whose subsidiaries are active both

domestically and internationally within its two divisions of Filling and Packaging Technology and Other Industrial Holdings.

Today, the Klöckner-Werke Group concentrates on its industrial activities. The Filling and Packaging division is made up of the companies of the KHS Group. They operate on a global basis and are managed centrally from Germany. KHS plans, builds and installs complete beverages process, fil-tration and filling systems for the beverage and non-beverage industry. KHS is ranked No. 2 worldwide.

The Other Industrial Holdings division is made up of the companies Klöck-ner DESMA Schuhmaschinen (KDS), Klöckner DESMA Elastomertechnik (KDE), REMAK and Klöckner Hänsel Processing (KHP). These companies manufacture injection moulding machinery, (KDE), shoe machinery (KDS), robot and automation systems for plastic machines (REMAK) and process machinery for the confectionary industry (KHP).

Klöckner-Werke AG shares are listed on the SDAX....