Thu, Mar 27, 2014 - Page 13 News List

Bike chain maker to buy Tianjin firm

By Camaron Kao  /  Staff reporter

Bicycle-chain maker KMC Kuei Meng International Inc (桂盟國際) yesterday said it plans to spend about 165 million Chinese yuan (US$26.57 million) to fully acquire China-based KMC Transmission (Tianjin) Co (天津桂盟) to boost its revenue and profit.

The Tianjin-based company is owned by Wu Ying-jin (吳盈進), chairman of KMC Kuei Meng International, which accounts for about 70 percent of the global supply of bicycle chains.

The transaction is expected to be completed on July 1, allowing KMC Kuei Meng International to book revenue and profit from the Tianjin-based company starting in the second half this year, company spokesman Jeter Chen (陳泳仁) told reporters yesterday.

Last year, KMC Transmission (Tianjin) reported revenue of 140 million yuan and a profit of 18 million yuan, Chen said.

Chen said KMC Transmission (Tianjin) could see annual revenue growth of about 10 percent, in line with the growth of the bicycle industry in northern China.

KMC Kuei Meng International estimated that the deal would help lift the company’s revenue to NT$2.5 billion (US$81.89 million) this year, up 20.77 percent from NT$2.07 billion a year ago.

The acquisition is just the start of KMC Kuei Meng International’s plan to acquire other China-based firms owned by the Wu family.

The company currently has an annual production capacity of 24 million chains, while the three companies owned by the Wu family, including KMC Transmission (Tianjin), have a combined capacity of 55 million chains a year.

Chen said the company does not plan to acquire the two other Chinese companies this year.

China is the largest production base for bicycles worldwide, accounting for about 67 percent of the global production capacity, he said.

Last year, KMC Kuei Meng International reported a profit of NT$399 million, or NT$3.79 per share, up 55.3 percent from NT$256.92 million, or NT$2.49 per share, in 2012, aided by sales in the US, Europe and Indonesia, Chen said.

KMC shares were flat yesterday at NT$128.50, underperforming the over-the-counter index, which rose 0.39 percent.

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