China’s largest heavy machine manufacturer has turned to Azevedo Sette Advogados to advise on its construction of a new factory in Brazil – the company’s first ever overseas investment.
The deal, which was announced on Tuesday, saw Antonio Anastasia, governor of the state of Minas Gerais, sign a protocol of intent with Xuzhou Construction Machinery Group (XCMG) to invest 334 million reais (US$ 205.8 million) in a heavy machinery factory in Pouso Alegre.
XCMG is currently finalising the land acquisition and is in the process of establishing the plant and a local distribution centre to import and resale its products in Brazil.
Construction will begin in July, with plans to begin operating next year.
Azevedo Sette, which was hired in February as sole external counsel, advised XCMG on every aspect of the deal ranging from tax, environmental, and real estate; to corporate, contracts and labour and litigation.
The firm also oversaw the negotiation of the company with governmental bodies at state and municipal level, as well as advising on the acquisition of assets by the company.
“Considering that this was their first investment abroad, the company’s administration and CEO had many doubts and concerns which we followed very closely,” says Azevedo Sette associate Gustavo Guimaraes de Almeida Barros.
“It was a very challenging deal, not only because of the time constraints imposed by our clients to close the deal and the very long working hours, but also due to the requirement we meet and reach mutual agreement between the client and government bodies.”
It is estimated the new factory, which will manufacture cranes, hydraulic excavators and other equipment, will generate 1,000 direct jobs and up to 4,000 indirect jobs in the state.
According to local reports, XCMG was encouraged to invest in Minas Gerais through a combination of reduced taxes and a donation of land, equal to a quarter of the 806,000 square metre site where the factory will be built, that was offered by the state government.
The investment by XCMG is the latest in a number of firsts by Chinese companies in Brazil – which since the start of the year has seen China’s CPIC turn to Uría Menéndez and Dias Carneiro Advogados to advise in its acquisition of a Brazilian fibreglass reinforcement, the first ever overseas acquisition by a Chinese fibreglass reinforcement manufacturer, and in January saw Milbank, Tweed, Hadley & McCloy LLP, Pinheiro Neto Advogados and Machado, Meyer, Sendacz e Opice Advogados help the State Grid Corporation of China seal the first non-Asian acquisition of an electricity grid in Brazil from four Spanish infrastructure operators.
Counsel to XCMG
- Azevedo Sette Advogados
Partners Luiz Augusto Azevedo Sette, Ana Paula Terra Caldeira and Frederico da Fonseca Silva and associates Gustavo Guimaraes de Almeida Barros, Bruna Bouissou and Felipe Parreira Guerra Lins
Latin Lawyer, Monday, 23rd May 2011 by Joe Rowley