Heist Yale Material Handling Group Co., Ltd. completed the acquisition of the controlling interest of Zhejiang Meicos Forklift Co., Ltd. in Cleveland, Ohio. On June 1, 2018, Heist Yale Material Handling Group Co., Ltd. (NYSE code: HY) announced today that the company has completed the acquisition of 75% of the outstanding shares and controlling interest of Zhejiang Meicos Forklift Co., Ltd. from KNSN Pipe&Pipe Company Limited, The total purchase price is 90 million US dollars, and the purchase capital comes from the cash held by Hester Yale. After the acquisition, Zhejiang Meicos Forklift Co., Ltd. has been renamed as Heist Yale Meicos Forklift (Zhejiang) Co., Ltd. (hereinafter referred to as "Hester Jerome"). The current senior management of Zhejiang MECOS Forklift Truck (hereinafter referred to as "MECOS") will hold the remaining 25% of the equity of Heisteyrus through Y-C Hong Kong Holding Company Limited.
As previously announced, this transaction is a strategic action, which is expected to expand the company's global low-cost manufacturing capacity, develop competitive sourcing sources of spare parts, and further strengthen Heist Yale's light duty and standard product portfolio by adding more products to its already leading global material handling business, And increase the company's share in the growing global light duty and standard market segments as well as in the Chinese market.
In the local statutory report, in the fiscal year ended December 31, 2017, Meicos reported revenue of 528 million yuan, about 77 million dollars, and created an operating profit margin of about 4% through the combined domestic and export sales of nearly 7000 vehicles. In view of the investment that Heist Yale is expected to make in the joint venture, although the acquisition is profitable at present, due to the need to provide the expenses and capital investment required for the implementation of the company's integration plan, it is expected that the company's pre tax income will dilute by 5 to 10 million dollars next year. In addition to these expenditures and investments, a one-time incentive payment of up to US $10 million should be paid on the third anniversary of the transaction when certain performance conditions are met. According to the conservative market share and synergy objectives, the acquisition is expected to gradually increase the revenue of Heist Yale in 2020.
At the end of today, Hester Yale will become an independent legal entity, with an independent management team under the leadership of Mr. Lu Jinhong and an independent board of directors headed by Colin Wilson, President and CEO of Hester Yale Group. However, Hester Jerome Kos will be managed as a department of the Company's JAPIC market segment and report to the senior management of JAPIC. Its performance will also be consolidated into the financial statements of the forklift JAPIC market segment.