Tangshan Sanyou Eyes Fiber Business
Year:2009 ISSUE:34
Click:348    DateTime:Dec.04,2009
Tangshan Sanyou Eyes Fiber Business    

Tangshan Sanyou Chemical Industrial Co., Ltd. (Tangshan Sanyou, SH: 600409) said on November 17th that it will issue up to 120 million new shares to Tangshan Sanyou Group Co., Ltd. and Tangshan Sanyou Alkali Industry Co., Ltd. for their holdings in Tangshan Sanyou Xingda Chemical Co., Ltd. (Xingda). Tangshan Sanyou will acquire Sanyou Group's 53.97% interest in Xingda and Sanyou Alkali's 6.16% stake in Xingda. The assets are valued at RMB725 million.
   Before this deal, Tangshan Sanyou has agreed to buy a 39.87% stake of Xingda from China Cinda Asset Management Corp.
    If the deal is successful, Xingda will become Tangshan Sanyou's wholly owned unit. By September 30th, 2009 Xingda's total assets were initially valued at RMB1.205 billion. Tangshan Sanyou's main product is caustic soda, which is the key building block of viscose fiber, while Xingda is China's leading viscose fiber maker with good profitability. This acquisition will help Tangshan Sanyou extend the business to downstream sectors, which will create synergies between its chemical business and fiber business. Meanwhile, the takeover will expand its asset scales and create a new profit growth, making Tangshan Sanyou an integrated chemical company with sustainable profitability.
   Tangshan Sanyou said the deal is also in line with the development strategy of Sanyou Group, which is injecting quality assets into the listed arm for a group listing. As of November 4th, Sanyou Alkali held a 50.18% stake of Tangshan Sanyou. Sanyou Group is the ultimate parent of Tangshan Sanyou as the group owns 100% of Sanyou Alkali.