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SHW AG: Joint venture negotiations with Shandong Longji successfully completed

DGAP-News: SHW AG / Key word(s): Joint Venture
SHW AG: Joint venture negotiations with Shandong Longji successfully
completed

27.01.2015 / 07:23

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PRESS RELEASE

SHW AG: Joint venture negotiations with Shandong Longji successfully
completed

Chinese OEM market for quality brake discs holds significant growth
potential

Aalen, 27 January 2015. The discussions initiated last June between SHW
Automotive GmbH and Shandong Longji Machinery Co., Ltd., with regard to the
formation of a joint venture for brake discs for the Asian market, have now
come to a successful conclusion. SHW Automotive GmbH is a subsidiary of SHW
AG, which is listed in the Prime Standard market segment (SDAX) of the
Frankfurt Stock Exchange. Shandong Longji Machinery Co., Ltd. is listed on
the Shenzhen Stock Exchange.

The Sino-Foreign Equity Joint Venture will operate under the name SHW
Longji Brake Discs (LoungKou) Co., Ltd. The company's share capital amounts
to RMB 215.5 million (Renminbi), which is equivalent to approx. EUR 31.9
million at the current RMB/EUR exchange rate. SHW Automotive GmbH will be
the majority shareholder with an interest of 51 percent, and Shandong
Longji will hold an interest of 49 percent. The joint venture has its
headquarters in the eastern Chinese city of LoungKou (Shandong province).

"The discussions with our Chinese partners were always conducted in a
pleasant, constructive and trustful atmosphere," commented Andreas
Rydzewski, Member of the Management Board of SHW AG and responsible for the
Brake Discs business segment. "With Shandong Longji we have found the ideal
partner in successfully implementing our capital-efficient
internationalisation strategy in the Asian region and to participate
together in the strong growth of the Asian automotive markets."

The automotive experts from PwC Autofacts expect production of light
vehicles (vehicles < 6 t) in the emerging markets of the Asia-Pacific
region (including China) to grow by around 46 percent from 29.0 million
units in 2014 to 42.4 million vehicles by 2019.

Joint venture will be profitable from the start

In the future, the company will focus on the development and production of
processed brake discs for passenger cars and light commercial vehicles
mainly for multinational automotive manufacturers in the Asian market.

"The demand for quality brake discs - especially in the OEM business - is
huge in China," remarked Andreas Rydzewski. "Together, together with our
Chinese joint venture partner we will be able to meet the demands of
international vehicle manufacturers for high quality processed brake discs