ST Engineering on Thursday announced that ST Kinetics' wholly-own subsidiary Autonomous Technology will divest its 60 per cent equity stake in Guizhou Jonyang Kinetics for a cash consideration of 200 million yuan (S$43 million).
The sale and purchase agreement is between Autonomous Technology and its joint venture partner, Guiyang Industrial and Commercial Assets Management.
ST Kinetics, which is the land systems arm of ST Engineering, has been continuously reviewing its specialty vehicle business in China.
"The management (of ST Kinetics) has decided to exit the Guizhou Jonyang Kinetics business, which builds excavators and is in a segment that increasingly requires scale to gain competitive advantage," said ST Engineering in a release on Thursday.
The consideration for the divestment takes into account the general condition of the construction equipment market in China, as well as Guizhou Jonyang Kinetics' net assets value and its expected financial performance.
The divestment, which is pending the approval of relevant governmental or regulatory authorities, is not expected to have any material impact on ST Engineering's financial results for the current financial year.