Xugong Science buys affiliates of parent group
Xugong Construction Machinery Science & Technology Co., controlled by China's biggest building-equipment maker, will buy assets including stakes in crane and heavy-machinery producers for 5.3 billion yuan ($777 million) to widen its range.
The company will issue 322.4 million new shares to parent Xugong Group Construction Machinery Co. in exchange for control of five units, it said yesterday in a Shenzhen Stock Exchange statement. The shares will cost 16.47 yuan each, an 18 percent premium to today's closing price.
The deal will allow Xugong Science to offer more equipment as a construction boom and economic growth spurs demand. China Cosco Holdings Co., the country's biggest shipping line, and SAIC Motor Corp., the largest carmaker, have also bought assets from state-owned parents as the government has encouraged such sales to boost competitiveness and efficiency levels.
Xugong Science will buy 90 percent of Xuzhou Heavy Machinery Co., a 60 percent stake in Xuzhou Xugong Specialized Automobile Ltd., half of Xuzhou Hydraulic Component Factory Co., a 90 percent stake in Xuzhou Truck-Mounted Crane Co. and a 90 percent stake in Xuzhou Xugong Special Engineering Machinery Co.
Xugong Group's stake in Xugong Science will rise to 58 percent from 34 percent following the deal.
Carlyle Group scrapped a plan to buy a stake in Xugong Group in July after failing to win approval from China's government. It had adjusted the offer three times.
Xugong Science has slumped 37 percent this year. It gained 0.3 percent today to 13.99 yuan.
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