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Oerlikon Neumag to sell Carding business, streamline portfolio

August 8, 2011

Zhengzhou Hi-Tech Non-woven Technology, a Chinese textile group, will buy the unit for an undisclosed sum.

Oerlikon Neumag has announced it will focus on its main business activities such as BCF, Staple Fiber and selected Nonwoven Equipment. On August 5, Oerlikon Neumag signed all documents to sell its Carding business (retroactive with effect from April 1, 2011) to the Zhengzhou Hi-Tech Non-woven Technology Co., Ltd, China, a subsidiary of the Chinese Hi-Tech Group Corporation (formerly China Hengtian Group Co., Ltd.)., one of the leading textile technology groups in China. This transaction is expected to close in the 3rd Quarter 2011.

"We are focusing our organization on areas where we are strategically well positioned. There is clearly better development potential for the Carding business and its employees within the Hi-Tech Group due to the growing importance of China market for carding business and the well established organization and presence of Hi-Tech group in the related business fields in China," says Thomas Babacan, segment CEO Oerlikon Textile and COO Oerlikon Group.

In the technological field of carding, the Business Unit Oerlikon Neumag produces special installations and components for nonwovens production, employing about 250 people at three locations in Germany, Austria and Italy. The Carding business of Oerlikon Neumag is independent from the other product lines and does not fit anymore to the business strategy of Oerlikon Textile as it was not able to achieve the targeted profitability levels from Oerlikon Group over the past several years. Therefore, Oerlikon Textile conducted a divestment search process for a new owner with a strategic interest, the carding capabilities and the ability to manage the turnaround of Oerlikon Neumag's Carding business. After detailed evaluations, a sales agreement with Hi-Tech Group has been achieved.

The parties agreed not to disclose the sales price. In the course of executing the sales agreement the respective employees are planned to be transferred to the Hi-Tech Group's local affiliate, too, however with German, Austrian and Italian labor law respectively continuing to apply according to statutory law.

Hi-Tech Group, one of the leading textile technology groups in China, has excellent access to the Asian and especially the Chinese markets as well as a strong infrastructure. In the past, Oerlikon Neumag and Hi-Tech Group have cooperated successfully in selected carding business opportunities by complementing high technology competences of Oerlikon Neumag with certain products of the Hi-Tech Group.

"We will put the carding business on a solid and future-oriented foundation by selling it to the Hi-Tech Group. The combination of a large market and local supplier access, competencies in carding and a wide range of products of the Hi-Tech Group together with the leading technologies of Oerlikon Neumag's carding unit will create valuable synergies for customers. In addition, Hi-Tech Group is also committed to continuing Carding activities and employment in Europe. We believe this sale is the best solution for the Carding business and its employees," says Oerlikon Textile CEO Thomas Babacan.

Zhang Jie, chairman of Hi-Tech Group, comments, "This acquisition is highly in line with Hi-Tech Group's corporate strategic goal and will be an important step for our global business development. We are very confident that the synergies between the acquired Carding unit and our existing nonwoven business will bring benefits to all parties involved."

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