Metal Products News
- Chalco to take over Baotou Aluminum
Date: 5-Jul-2007 Sources: (Shenzhen Daily)
ALUMINUM Corp. of China Ltd. (Chalco), the world's No.4 aluminum producer, has agreed to buy Baotou Aluminum for about US$2 billion in stock as part of an industry consolidation.
Chalco is the latest of the country's industrial heavyweights to restructure in a bid to become a top global player. Chalco has grown fast as the government consolidates a fragmented, energy-intensive aluminum industry, aiming to rival Alcoa, which owns 8 percent of Chalco, and Alcan.
Hong Kong and Shanghai-listed Chalco faces falling domestic prices for alumina, the main raw material for aluminum. Chalco is the world's third-largest alumina producer.
Its parent, Chinalco, is keen to shift major production assets to Chalco, its flagship listed unit, to help secure its leading position in the domestic industry.
'The proposal would benefit both companies,'said Heng Kun, chief analyst at Essence Securities in Beijing, predicting both firms' shareholders would be satisfied with the offer.
Chalco said it would issue new shares to buy Shanghai-listed Baotou Aluminum.
Under the plan, which needs shareholder and regulatory approval, each Baotou Aluminum share could be swapped for 1.48 Chalco shares, valuing the offer at just above US$2 billion based on Chalco's close of 23.94 yuan in Shanghai on Tuesday.
Trading in shares in both Chalco and Baotou Aluminum had been suspended since June 11, after Chalco proposed a takeover of Baotou Aluminum.
Analysts have said Chalco was trying to ramp up its aluminum division as alumina prices were expected to come under pressure from a sustained expansion of domestic capacity.
Chalco is eyeing Baotou's estimated 300,000 tons of annual aluminium capacity, which would boost its own capacity by nearly 10 percent.
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