Business Activities News
- Goldman-led group offers to take over Shuanghui
Date: 12-Feb-2007 Sources: (Shenzhen Daily)
A CONSORTIUM led by Goldman Sachs is offering 3.63 billion yuan (US$468.6 million) to buy A shares it does not already own in Shenzhen-listed meat-processing firm Henan Shuanghui Investment & Development Co.
However, analysts and domestic media said the deal was not expected to happen because the offer represented a deep discount to the price of Shuanghui's A shares, which last traded at 31.17 yuan each May 31 last year.
Rotary Vortex, in which Goldman Sachs holds a 51 percent stake, is offering 18 yuan per share for the A shares of Shuanghui, a top domestic meat processor, Shuanghui said in a statement last week.
The A shares Rotary Vortex is offering to buy represent a 39.29 percent stake in Shuanghui Investment.
Analysts said Rotary Vortex was just making a cosmetic offer, as required by previous Chinese rules governing acquisitions of stakes in domestically listed companies.
The old rules required a buyer to make a general offer if the stake it bought in a listed firm exceeded 30 percent. Rotary had to make the offer as it signed a deal to buy a combined 60.72 percent indirect stake in Shuanghui before the rules were amended late last year.
The new acquisition rules, implemented in September 2006, do not require a buyer to make such an offer.
'The deal is unlikely to happen as no one would want to sell their shares at such a low price,'said Dong Junfeng, analyst at Galaxy Securities.
The offer price of 18 yuan per share was the weighted average trading price of Shuanghui's A shares in the 30 trading days prior to June 1 2006, when the stock was suspended from trading, the Shanghai Securities News said.
The stock shot up about 70 percent within about a week after Shuanghui announced Rotary Vortex's planned purchase of the stakes in Shuanghui Investment from major shareholders.
Rotary is still awaiting final approval from the China Securities Regulatory Commission to finalize the acquisition of the 60.72 percent stake in Shuanghui.
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