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WeichaiPower's strategic investment in PSI officially marks its entry into the North American power system market

2017.04.07

 

Important information:

•Weichai Power has invested 60 million US dollars to form a share purchase agreement with Power Solutions International Inc., a NASDAQ listed company, holding 7.5 million ordinary shares, representing 40.71% of its total issued share capital, and becoming its largest share holder. According to the agreement, 18 months after the completion ofthe transaction, Weichai Power will be able to exercise the call option to further hold Power Solutions International Inc. shares to 51%.

• Weichai Power will form a strategic partnership with PSI to conduct comprehensive and close cooperation in North America and China, in areas such as product development, procurement, product sales and service.

• With PSI's technology, experience, existing customer base, sales channel and service net work in North America, Weichai Power can enter the North American market faster, participate in North American power system market competition, and improve market penetration and brand influence.

• WeichaiPower will cooperate with PSI to enhance the full range of research and development on especially the more powerful non-mobile engine to fully realizethe gas engine technology upgrade.

• Weichai Power has the right to appoint at least two directors to join the PSI Board of Directors, and one of them will be appointed Chairman of the Board to effectively ensure Weichai Power's discourse on PSI significant events and achieve strategic objectives.

On March 20, 2017, Weichai Power Co., Ltd.(Hong Kong Stock Exchange Code: 2338, Shenzhen Stock Exchange Code: 000338) announced that its wholly-owned subsidiary Weichai North America signed a share purchase agreement with Nasdaq listed company Power Solutions International Inc. (hereinafter referred to as "PSI").The total investment is 60 million US dollars, and Weichai North America holds 7.5 million shares of common stock, accounting for 40.71% of the total share capital and making it the largest shareholder of PSI. In addition, according to the agreement, 18 months after the completion of the transaction, Weichai Power will be able to exercise the call option to further hold Power Solutions International Inc. shares to 51%.

Founded in 1985, PSI is a leading global engine manufacturer and distributor founded under the law of the state of Delaware, producing various types of high-performance, certified low-emission engines of natural gas, propane and other non-diesel fuel. Its products are in various platforms with wide power coverage, and are in compliance with EPA and CARB emission standards. They are applied in a wide range of areas, mainly for power generation, industrial mobile applications, transportation, etc. The customers of PSI include many large multinational OEMs that manufacture Industrial equipment. PSI is the sole supplier of alternative fuel power systems for most customers, and its power systems are currently being used by OEMs for a wide range of applications, including fixed generators, oil and gas equipment, forklifts, aerial work platforms, industrial sweeping machines and other industrial equipment. In addition, PSI has introduced a range of alternative fuel power systems specifically for the on-road market.

After the completion of the transaction, Weichai Power and PSI will form a strategic partnershipto cooperate closely in China and North America in product development, purchasing, sales and services. With PSI's technology, experience, existing customer base, sales channel and service networkin North America, Weichai Power can enter the North American market faster, participate in North American power system market competition, and improve market penetration and brand influence.WeichaiPower will cooperate with PSI to enhance the full range of research and development on especially the more powerful non-mobile engine to fully realize the gas engine technology upgrade. At the same time, Weichai Power has the right to appoint at least two directors to join the PSI Board of Directors, and one of them will be appointed Chairman of the Board to effectively ensure Weichai Power's discourse on PSI significant events and achieve strategic objectives.

Weichai Power has always adhered to the "product management + capital operation" dual-driving global operation strategy, which successfully helps build a new collaboration pattern consisting of powertrain, vehicle, hydrauliccontrol, and auto part segments. In recent years, Weichai Power actively promotes the globalization strategy and gradually formsthe overseas expansion strategyof "trade export + localized production + technology export + mergers and acquisitions". In the future, Weichaiwill seize the "One BeltOne Road" strategy, "Made in China 2025" and other opportunities to promote industrial structure transformation from single business to diversified business, regional structure transformation from domestic leading to global leading,  product structure transformationfrom low/medium-end to high-end, staff structure transformation from labor-intensive to intellectual-intensive,production transformationfrom traditional manufacturing to intelligent manufacturing, and growing mode transformationfrom scale to the endogenous growth, to finally lead the Chinese equipment manufacturing industry to face the world.

Moving towards the high-end, aiming at a hundred years of brilliance, and participating in global competition have always been the goal and the historical mission that Weichai pursues.The investment in PSI is an important strategic planfor Weichai Power's positive participation in the global high-end power system market competition. Both sides will focus on strengthening global business collaboration, especially the North American market development, and constantly enhance Weichai's global business layout and international competitiveness.

Shandong Heavy Industry Group Chairman, Weichai Power Chairman and CEO, Tan Xuguang said:"In recent years, Weichai Power always adheres to the principle of strategic investment.Through the M&A of KION Group, Linde Hydraulics,Dematic, other investment in North America and Europe, and promotion in the countries and regionsalong the "One Belt and One Road", Weichai's global market layout has been basically completed. After deep and effective integration, Weichai Group's business structure, regional structure and industrial structure have been optimized. The overseas M&A and globalization strategy have achieved wonderful results.In the future, we will make full use of the rich strategic resources we have in control, effectively play the advantage of global business collaboration, promote business in the global strategic market, and continuously enhance the level of globalization and brand awareness. The investment in PSI isa solid step forwardto becoming world leading and moving towards the high-end. It will no doubt have an important strategic significancein the long-term development and the enhancement of international competitiveness and brand influence! "

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About Weichai Power Co., Ltd. (Stock code: 2338HK, 000338SZ)

Founded in 2002, Weichai Power is one of China's most comprehensive automobile and equipment manufacturing industry group. The Group consists of Shacman, Fast Gears, KION Group AG, LindeHydraulics KG, Dematic Group andother more than 40 high-quality enterprises. The new collaboration pattern consisting of powertrain, vehicle,hydraulic control and auto parts hasformed the national auto industry's most complete and most competitive industrial chain, and brought out the engineering machinery industry's core technology and products, which allows Weichai to developinto China's most comprehensive automobile and equipment manufacturing industry group. Weichai was listed on the Main Board of the Stock Exchange of Hong Kong on March 11, 2004, and returned to the China Mainland stock market on April 30, 2007 through stock-for-stock M&A.

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