The Shard in London used glasswork provided by Permasteelisa, which is being sold by Lixil
Japanese conglomerate Lixil has agreed to sell Italian construction group Permasteelisa to a private Chinese company for €467m.
Lixil, which bought the company for €573m in 2011, is selling to Shenzhen-based Grandland Group.
Lixil, which has aggressively bought overseas assets in recent years, may have been forced to sell the assets it has had trouble integrating, say people familiar with the company.
The Financial Times reported Lixil was exploring the sale of Permasteelisa in July last year. At the time Lixil also said it would sell its wooden building material subsidiary Hivic to a Japanese private equity fund Polaris Capital for an undisclosed price.
Permasteelisa has become well known for its glasswork on projects such as the Shard in London, Apple’s headquarters in Cupertino and the Sydney Opera House.
Lixil’s acquisition of the Vittorio Veneto-based group was followed by several other deals including the buyouts of American Standard bathroom products for $342m and a similar German group, Grohe, for €3.1bn. By the end of the buying boom, the company had wracked up almost $4bn in overseas deals.
But by mid-2015 its global expansion plans had already showed signs of difficulties. A Chinese subsidiary of Grohe, Frankfurt-listed Joyou, dragged Lixil into a scandal.
Joyou had collateralised its Chinese factories several times to borrow money, and ploughed some of that cash into China’s shadow banking sector. The collapse of a lending pyramid in south-eastern China blasted a hole in Lixil.
That debacle forced Lixil to warn investors of a ¥66bn ($560m) loss for 2015 after Joyou filed for insolvency.
The chief executive that led the debt-fuelled acquisition binge, Yoshiaki Fujimori, resigned at the end of that year. His successor, Kinya Seto, has pledged to focus on consolidation and strengthening its balance sheet.
Lixil, which itself was formed by the merger of several Japanese groups in 2011, cited differences in business cycles as a reason for the divestment of Permasteelisa. Barclays advised Lixil on the sale.
Grandland, the Chinese company taking over Permasteelisa, specialises in architectural decoration, according to a statement from Permasteelisa. Evergrande, one of China’s largest homebuilders, is a strategic partner of Grandland. Permasteelisa says it will maintain operating independence from the Chinese company.
The acquisition for the Chinese group comes despite increasingly strict regulations limiting outbound acquisitions.
Regulators cracked down on overseas deals by Chinese companies starting in late 2016. Since then, oversight of large deals has intensified and banks have been asked to probe their exposure to a number of large, acquisitive corporations, including HNA, Fosun, Dalian Wanda and Anbang.
As of last week, Chinese companies had announced about $85bn in outbound acquisitions this year, a marked slowdown from last year.