Qingdao Doublestar is to acquire Hengyu Technology for 899 million yuan (US$130m). As part of the purchase, the company plans to upgrade Hengyu Technology’s production equipment and streamline processes.
Guangrao County, where Hengyu Technology is based, is famously the tire capital of China. However, with the structural overcapacity, export and environmental protection issues becoming more and more prominent in recent years, companies with big developments of large-scale, low-end production capacity have suffered losses or even bankruptcy.
In response to these circumstances, in June 2017, the Guangrao County government decided to actively introduce enterprises or listed companies within the tire industry with a state-owned background as the platform leader and operator of the company integrating Guangrao Tire Enterprises, and many tires for Hengyu Technology. The company has been reorganized, with the County government providing the necessary policy support.
In February 2018, Qingdao Double Star took the lead in co-sponsoring the establishment of the Youchuang No.1 Fund jointly with Guangrao Finance and Shandong Yinji as a platform for mergers, acquisitions and reorganization – integrating Hengyu Technology as a pilot enterprise.
In recent years Hengyu Technology has been restructured. Its current production capacity is six million vehicle tires and 650,000 passenger car tires. Following the upgrades, a manufacturing capacity of 10 million vehicle tires and 800,000 car tires will be possible.