LiuGong to acquire HSW Construction Equipment

March 24, 2011 – Chinese Construction
equipment manufacturer LiuGong Machinery Corporation is to acquire major Polish
company HSW (Huta Stalowa Wola) Construction Equipment Division and its
distribution subsidiary,Dressta. Company executives announced
the development at the show and vice chairman and president, Zeng Guang’an,
said the acquisition is another bold step in LiuGong’s global growth strategy.
Further acquisitions have not been ruled out.

“We are pleased to partner
in this agreement with HSW as this provides an excellent opportunity for
LiuGong to acquire manufacturing capacity in Europe, as well as technology that
will supplement our machine lines,” said Zeng. “This acquisition helps us
continue success with our five-year strategy to become a top 10 construction
equipment manufacturer.”

When concluded by the end of
May or early June, the acquisition will be LiuGong’s first outright purchase of
manufacturing facilities and distribution outside of its domestic market, Zeng
said.

Financial arrangements for
the acquisition will be disclosed when the final agreement is signed. LiuGong
said it would not acquire HSW’s military manufacturing business.

Currently LiuGong is one of the largest wheel loader manufacturers in the world with 15 per cent global market share.
It was the 15^th largest
construction equipment manufacturer in the world in 2010. It has 12 product lines, including wheel
loaders, bulldozers, backhoes, skid steers, forklifts, graders, excavators,
rollers, truck-mounted and crawler cranes and pavers, and last year it produced
and sold more than 56,500 machines worldwide with production from 16 manufacturing facilities inside and
outside of China.

Established in 1937, HSW
manufactures crawler dozers at its plant in the Podkarpackie province in
south-western Poland, and it also produces wheel loaders, side boom pipe-layers, and machines customized for
landfill applications and logging operations.

Dressta is the exclusive
marketer of HSW equipment with offices around the world. Machines are sold
under the HSW brand in parts of Eastern Europe, but are sold under the Dressta
brand throughout the rest of the world.

HSW stock is primarily
government-held, with Poland’s State Treasury as the largest stockholder.

With HSW Dressta, LiuGong
will acquire a well-respected and high-quality brand with a strong bulldozer
line complementary to LiuGong’s product mix, said David W. Beatenbough, vice
president of research and development for LiuGong, and a leader in the
acquisition effort. He noted the purchase accomplishes several strategic goals
for LiuGong.

“With HSW Dressta, LiuGong
acquires proven technology within the bulldozer segment,” said
Beatenbough,
adding that LiuGong will acquire all the patents for technology and
designs, for complete
machines as well as component technology including undercarriages
and such driveline components as axles, transmissions and torque
converters.

“HSW is one of only seven
manufacturers in the world with a full line of bulldozers. And the
machines
have a long design history that reaches back to International Harvester,
which was an early developer of track-type undercarriages that led to
true construction machinery, as we know it today.

“LiuGong will benefit from HSW’s world class engineering expertise and
we’ll gain access to some large, high horsepower machines and advanced driveline component technology.”

Beatenbough observed that,
like LiuGong with its 750 engineers working in R&D, HSW has an emphasis on
innovation with a sophisticated research and development center. Both companies
have an intense focus on quality.

“We’ll quickly be sending
teams back and forth between Poland and China so we’ll be able to share
innovations. We will continue
production in Europe of HSW’s
current product range, and supplement this
with production in Poland of some of LiuGong’s core models to serve the
European markets,” Beatenbough
said,
pointing out that LiuGong
will also benefit from the reach of HSW Dressta’s distributor and dealer
network, which will help LiuGong continue to penetrate important markets.

LiuGong has already
located a plant outside its domestic market, having opened a wheel loader
factory in India two years ago. The HSW acquisition gives LiuGong a plant already in operation in Europe close to
its customers, with a highly skilled workforce, Beatenbough said.