China’s CRRC ‘in talks to buy Škoda’
29. 11. 2016 | Source: BusinessInfo.cz
Another piece has been added to the mosaic of information on the possible sale of Pilsen-based Škoda Transportation to a Chinese buyer.
Citing commercial sources, German business daily Handelsblatt reported that the engineering firm’s owners are engaged in sale negotiations with giant Chinese rolling stock manufacturer CRRC Group. Škoda Transportation declined to comment beyond making a vague reference to projects jointly pursued with Chinese partners. One such project was lately mentioned by E15 daily in a report on a Škoda-CRRC consortium that is bidding in Israel for the delivery of 60 electric trains worth the equivalent of around CZK 27bn.
Handelsblatt went so far as to indicate a possible price tag for the Pilsen-based company in the region of EUR 2bn. That is just shy of four times Škoda Transportation’s 2015 revenues. According to the German newspaper, the rather high price would include a premium for an acquisition that would essentially push open the door to the European market for a substantial number of Chinese firms. “Chinese investors are scouring the market for anything of interest,” Handelsblatt wrote, after interviewing Maria Leenen of consulting company SCI Verkehr.
Booking reported annual revenues of around EUR 32bn, state-owned CRRC Group is the world’s biggest rolling stock manufacturer. However, it lacks the required certificates and permits to operate in Europe, the market of which is top heavy with regulations and standards. Škoda Transportation, on the other hand, possesses the necessary paperwork. Moreover, its main attraction and advantage is that it is a manufacturer of complete trains as opposed to individual constituent parts, Handelsblatt noted. With its value set to rise to around EUR 44.4bn by 2020, the European rail transportation market is second only to its Asian counterpart.
Originally published in E15 weekly, economic and business newsmagazine. Author: Jan Šindelář