China Yuchai International main operating subsidiary, Guangxi Yuchai Machinery (GYMCL) will use equity transfer to restructure ownership of its joint venture – Yuchai Remanufacturing Services (Suzhou) (YRC), taking control of a company previously owned 49% by Caterpillar (China) Investment.
Caterpillar will transfer its entire 49% equity ownership in YRC to GYMCL, bringing GYMCL’s equity ownership to 100% and making it a wholly-owned subsidiary of GYMCL. No financial terms were disclosed, as the total consideration is nominal to China Yuchai’s balance sheet. The transaction is subject to approval by the Suzhou Bureau of Commerce.
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YRC was established in China to provide remanufacturing services for GYMCL’s diesel engines and components as well as some Caterpillar diesel engines and components. Incorporated in April 2010, YRC began operations in 2011.
Benefitting from Caterpillar’s expertise, YRC has developed high-quality standards and critical management processes, the Chinese company said.
“Both parties have agreed that it is now an appropriate time for GYMCL to assume control of YRC as there are significant advantages from the integration of the remanufacturing business with GYMCL’s manufacturing operations. Caterpillar has agreed to continue to provide technical support to YRC and to further enhance awareness of the advantages of remanufacturing within China. Both parties will continue to maintain a mutually beneficial working relationship as a result of their partnership in YRC over the past few years,” YRC said.
Weng Ming Hoh, president of China Yuchai, said: “We look forward to further developing the remanufacturing business as we believe that it provides a sustainable long-term solution to the increasing concerns over environmental pollution in China.
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By GlobalData“Remanufacturing is beneficial to our customers and is an additional service we can offer. We believe that our engine operations and now wholly-owned remanufacturing subsidiary will be able to generate greater synergy and create more value for GYMCL’s engine users.”
