CR Power shareholders scupper merger
By Richard Fu |
July 23, 2013, Tuesday
|
Print Edition
Print Edition
CHINA Resources Power Holdings Co, the power generator at the center of a corruption scandal, has scrapped plans to merge with a sister company following shareholder opposition.
The rejection had been widely expected by analysts who said that a tie-up with China Resources Gas Group Ltd, a gas distributor, would produce little synergy. It also comes at a time when its parent company is being investigated by authorities over alleged wrongdoings in the 2010 purchase of coal assets in northern Shanxi Province.
About 64 percent of CR Power's minority shareholders yesterday voted against the merger proposal, according to a joint statement from the two companies, both listed in Hong Kong. CR Power jumped 5.6 percent yesterday.
When it announced the non-cash merger proposal in May, CR Power planned to issue 97 new shares for every 100 CR Gas shares held. That offer valued CR Gas at HK$24.64 per share at that time, representing a 13 percent premium.
But CR Power's shares tumbled last week after a journalist, Wang Wenzhi, alleged the company and Song Lin, chairman of its state-owned parent, China Resources Group, deliberately overpaid for some coal assets in Shanxi in 2010, resulting in the loss of billions of yuan in state assets.
The parent company is now being audited by the State-owned Assets Supervision and Administration Commission, Xinhua news agency reported. The Communist Party of China's anti-corruption watchdog is also looking into the issue after receiving a written complaint from journalist Wang.
The rejection had been widely expected by analysts who said that a tie-up with China Resources Gas Group Ltd, a gas distributor, would produce little synergy. It also comes at a time when its parent company is being investigated by authorities over alleged wrongdoings in the 2010 purchase of coal assets in northern Shanxi Province.
About 64 percent of CR Power's minority shareholders yesterday voted against the merger proposal, according to a joint statement from the two companies, both listed in Hong Kong. CR Power jumped 5.6 percent yesterday.
When it announced the non-cash merger proposal in May, CR Power planned to issue 97 new shares for every 100 CR Gas shares held. That offer valued CR Gas at HK$24.64 per share at that time, representing a 13 percent premium.
But CR Power's shares tumbled last week after a journalist, Wang Wenzhi, alleged the company and Song Lin, chairman of its state-owned parent, China Resources Group, deliberately overpaid for some coal assets in Shanxi in 2010, resulting in the loss of billions of yuan in state assets.
The parent company is now being audited by the State-owned Assets Supervision and Administration Commission, Xinhua news agency reported. The Communist Party of China's anti-corruption watchdog is also looking into the issue after receiving a written complaint from journalist Wang.
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