The Chinese have issued another huge vote of confidence in West Midlands industry – with a majority stake in a £30 million buyout of world-renowned Covpress .
Industrial powerhouse Shandong Yongtai, which has annual sales of around £2.7 billion, has joined forces with Telford-based TIA Treadsetters to buy up one of the West Midlands’ oldest manufacturers.
The deal marks one of the biggest investments by the Chinese in UK industry since the Longbridge car factory was rescued from the ashes in a £53 million takeover by Nanjing Automobile eight years ago in July 2005. It is understood the takeover is worth around £30 million, with the Chinese taking a 70 per cent stake and the Telford firm the remainder.
Covpress, which started life as the Coventry Radiator and Presswork Company in 1890, has a long and distinguished history in the West Midlands’ automotive sector, and in the 60s the Canley site was home to the largest manufacturers of radiators in Britain.
The firm traded under the Coventry Presswork banner following a management buyout in 1987 and was acquired by French group Lebranchu in 1991.
The French sold it on following a management buy-in with GIL Investments, part of the late David Grove’s business empire, in 2004.
Today Covpress is one of the UK’s best known suppliers of body panels to the car industry, with clients ranging from Jaguar Land Rover to Nissan and Renault, employing 454 people at Canley.
You Xiaoming, the managing director of Shandong Yongtai, based in Northern China with assets of around £650 million, said the Covpress deal would help spearheard the Chinese group’s new drive into European and other global markets.
“Yongtai is a leading tyre manufacturer in Shandong province and we sell to 30 countries all over the world including the World Rally Championship.
“We are the equivalent of Michelin in China.
“We believe this is two strong companies joining together in a win-win situation. Because we are strong in auto components, this acquisition will be an ideal complement to our existing product portfolio and we believe Covpress will be an excellent partner.
“Our plans are to grow our business through increasing our international profile and penetration into European and other world markets. The acquisition of Covpress is an important move for us in our overall strategy.”
Meanwhile, TIA Treadsetters chairman Peter Smith, whose company is based in Telford, said: “Negotiations over this deal have been going on for a good 14 months.
“They are a major tyre supplier to us and they want to distribute their Durun brand. This is a massive sea-change for Covpress. It will help cement relationships for our customers GM and JLR and create further opportunities in China.
“Business analysts and politicians are always talking about the need for inward investment and this is a shining example. Our Chinese partners were looking for a link with Coventry’s legendary history in the automotive sector and this alliance fits the bill to a T.
“The involvement of TIA means that Covpress remains essentially a British company.
“We can take advantage of investment from the fastest growing economy in the world and our Chinese colleagues will learn from the rich automotive expertise here in the West Midlands.”
Treadsetters director Trefor Jones added: “We had been out there buying Chinese tyres through agents for a long time.
“It is not easy to get in there and find them but we became the European distributor for Durun in 2004-05 and have established a very good relationship with them.
“We have established a very strong trust which has been key to this deal.
“It’s a vote of confidence in TIA Treadsetters as well; it’s a splendid move for us. TIA has expanded into Europe and South America and we have been pushing hard for further expansion.”
The deal has financial backing from ABN Amro, Chinese bank BOCOM and was brokered by Transcend Corporate with UK legal advice provided by Squire Sanders.
Financial due diligence was carried out by PwC, with sellers advised by KPMG and Gateley.