Electronics News
- Shanghai Electric to buy out Shanghai Power
Date: 3-Sep-2007 Sources: (Shenzhen Daily)
SHANGHAI Electric Group plans to buy out its mainland-listed unit and float itself in Shanghai in a US$390 million deal, becoming the latest Hong Kong-listed mainland firm to return to the mainland bourse.
Under the plan, Shanghai Electric would buy shares it does not already own in Shanghai Power Transmission & Distribution Co. by issuing 616.04 million domestic currency A shares at 4.78 yuan (US$0.634) each, Shanghai Power said in a statement Friday.
The Hong Kong-listed shares of Shanghai Electric, a major mainland power equipment maker, soared 41.3 percent to HK$4.96 (US$0.636) each, as analysts expect the company to benefit from the acquisition and a proposed asset disposal.
Shanghai Power shares rose their 10 percent daily limit to 30.86 yuan.
The acquisition would create a group with a combined market value of US$9.7 billion.
The plan, subject to shareholder approval, is aimed at diversifying and strengthening Shanghai Power and Shanghai Electric's operations, Shanghai Power said.
Credit Suisse said the acquisition would allow Shanghai Electric to better position itself in China's rapidly growing power equipment market.
Analysts also attributed the surge in Shanghai Electric shares to the planned sale of its entire 50.32 percent stake in Shanghai Diesel Engine Co. to SAIC Motor.
Merrill Lynch upgraded Shanghai Electric to buy from neutral Friday on expectations of one-off gains from the asset disposal. It lifted its per share earnings estimates for the company by 52 percent in 2007 and 61 percent in 2008.
Shanghai Electric plans to issue the new shares to minority shareholders in Shanghai Power, valuing the buyout offer at 2.94 billion yuan.
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