SmartHeat Inc. Acquires German Heat Pump Manufacturer

NEW YORK, Jan. 25, 2011 /PRNewswire-Asia/ -- SmartHeat Inc. (Nasdaq: HEAT), a market leader in China's clean technology energy savings industry, announced today that it signed a definitive agreement to acquire Gustrower Warmepumpen GmbH (GWP), a designer and manufacturer of high efficiency heat pumps, from Conergy AG. This acquisition will extend SmartHeat's clean technology heating solutions into the rapidly growing heat pump markets in Europe and China, enabling SmartHeat's customers to purchase technologically advanced heat pump technology at competitive prices. The transaction is expected to close at the end of February, subject to customary closing conditions, and is not expected to have a material impact to SmartHeat's revenue or EPS for the full 2011 fiscal year.

Heat pump systems provide heating, cooling and hot water for residential and commercial buildings and process heat for industrial applications using small amounts of electricity. Heat pumps are replacing conventional energy sources such as oil, gas and coal by using the solar energy stored in water, soil and air or recovering heat from wastewater or exhaust air. The various advantages of heat pumps in terms of energy efficiency, operating cost, Carbon Dioxide (CO2) emission reduction and their ability to provide heating and cooling in one machine, has made them the leading energy source for  new buildings in Germany and Austria, and has replaced conventional fossil fuel based technology in these countries to a large degree.

The acquisition of GWP represents the continued efforts of SmartHeat to expand its product lines of energy efficient heating and cooling solutions in China and to offer its clean technology products in new markets. Management believes that the acquisition of GWP allows SmartHeat to offer its customers some of the most advanced heat pump technology in the world and will allow SmartHeat rapid entry into the heat pump markets in China, Europe and the US, which are estimated to be growing at over 20% per year.

Mr. James Wang, Chairman and Chief Executive Officer of SmartHeat, described the reasoning behind the acquisition: "At SmartHeat, we are committed to developing and manufacturing clean technology heating solutions that directly reduce energy consumption and air pollution. We estimate that heat pumps represent heating and cooling sources in up to 80 percent of the new homes built in Europe and have large potential markets in China and the United States. We estimate that GWP heat pumps reduce household operating costs by between 50-80 percent. Heat Pumps are utilized by commercial users to reduce energy consumption and carbon dioxide emissions, a trend that is encouraged by policymakers in China. Our acquisition of GWP gives SmartHeat access to proven advanced technology, will accelerate our advanced heat pump production in China and will provide us with additional engineering know-how to expand SmartHeat's businesses in key world-wide markets."

Upon completion of the acquisition, GWP will become a part of SmartHeat's newly formed Heat Pump Division and have offices in Gustrow, Germany and Beijing, China.

About GWP

GWP has 20 years of history in clean energy systems, including heat pumps and related systems. GWP's strengths are in developing high efficiency compact heat pumps providing heating, cooling and hot water for family houses and engineered solutions for commercial buildings.

About SmartHeat Inc.

Founded by James Jun Wang, a former executive at Honeywell China, SmartHeat Inc. (www.smartheatinc.com) is a NASDAQ Global Market listed (Nasdaq: HEAT) U.S. company with its primary operations in China. SmartHeat is a market leader in China's clean technology energy savings industry. SmartHeat manufactures heat exchangers, custom plate heat exchanger units (PHE Units) and heat meters. SmartHeat's products directly address air pollution problems in China where massive coal burning for cooking and heating purposes is the only source of economical heat energy in China. SmartHeat's products significantly reduce heating costs, increase energy efficiencies, reduce air pollution, and have broad applications. SmartHeat's customers include global Fortune 500 companies as well as municipalities and industrial/residential users. China's heat transfer market is currently estimated at approximately $2.4 billion with double-digit annual growth according to the China Heating Association.

About Conergy AG

Conergy AG is one of the leading solar energy system providers in Germany with 1,600 employees in 16 countries and on 4 continents. Conergy AG was founded 1998 and develops, manufactures and markets all components for a complete photovoltaic system.

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. SmartHeat's actual results may differ from its projections. Further, preliminary results are subject to normal year-end adjustments. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect SmartHeat's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in SmartHeat's filings with the Securities and Exchange Commission.

SOURCE SmartHeat Inc.

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