(Yicai) Oct. 9 -- Chinese construction machinery supplier Guangxi Liugong Machine is selling its Polish production facilities to Polish state-owned military equipment and heavy construction machinery maker Huta Stalowa Wola, eleven years after acquiring them, but will retain the world-renowned Dressta brand.

Liugong’s Polish unit Liugong Dressta Machinery is selling the land, factories and equipment that it obtained when it bought Polish bulldozer manufacturer Dressta and Huta Stalowa Wola’s construction machinery business in 2012 to Huta Stalowa Wola for PLN212 million (USD49 million), the firm said yesterday. All factory employees will also be transferred to the Stalowa Wola-based company.

But Liugong will retain the Dressta brand, which it has built into a leading global bulldozer company with Poland as its European regional headquarters, the Liuzhou, southwestern Guangxi Zhuang Autonomous Region-based firm said.

It will transfer manufacturing back to China and will continue to sell finished machine and components as well as provide after-sales services, it added. This will help slash Dressta’s manufacturing costs by more than 30 percent and greatly boost profitability.

Liugong is expected to make PLN74 million (USD17 million) from the sale, it said. The assets were valued at around PLN205 million by UK professional services partnership Ernst & Young, slightly lower than the sales price of PLN212 million that was negotiated by both parties.

After the transaction, Liugong Dressta will focus more on research and development, design and marketing to provide more reliable and tailored solutions for the European market, Liugong said.

There has been regional insecurity in recent years amid the Russia-Ukraine conflict, and the Polish government is encouraging SOE’s to acquire high-quality industrial assets, it added.

Liugong's share price [SHE: 000528] was trading down 1.9 percent at CNY7.04 (USD1) as of 1 p.m. China time today.

Editor: Kim Taylor