Laiwu gets revised merger offer
By Richard Fu |
April 14, 2011, Thursday
|
Print Edition
Print Edition
CHINA'S Jinan Iron and Steel Co has proposed to merge with Laiwu Steel Corp under a revised plan, which includes a smaller premium between their share prices and a cash offer, as part of a steel industry consolidation in Shandong Province.
Shareholders of Laiwu Steel will still get 2.43 shares of Jinan Steel for every share owned, unchanged from the previous proposals, according to separate statements filed to the Shanghai Stock Exchange yesterday.
Laiwu shareholders are expected to accept the offer as its current share price represents a smaller premium to Jinan's compared to what they were last year, Hwabao Securities analyst Yu Baoshan said.
Jinan Steel rose 10 percent to 3.95 yuan while Laiwu surged 10 percent to 8.32 yuan yesterday.
The revised plan also comprises a cash offer. Laiwu shareholders will get 7.18 yuan (US$1.09) for each share they hold, and those of Jinan Steel will get 3.44 yuan - both 20-day average prices before February 18 when their shares were suspended from trading.
But shareholders are likely to reject the unattractive cash option which is lower than current stock prices of the two mills.
Yu said the revised plan's timing for the merger is good as the A-share steel sector had gained 11.5 percent during the two mills' share suspension.
Jinan and Laiwu had cited changes in the macroeconomic environment and difficulties in the steel industry in August last year when they announced a delay in the merger.
Jinan Steel's annual crude steel capacity will rise to 16 million tons from 10 million tons after the merger, Guosen Securities said. Shanghai's Baoshan Iron and Steel Co, the nation's largest listed mill, produced 26.45 million tons of crude steel in 2010.
Shareholders of Laiwu Steel will still get 2.43 shares of Jinan Steel for every share owned, unchanged from the previous proposals, according to separate statements filed to the Shanghai Stock Exchange yesterday.
Laiwu shareholders are expected to accept the offer as its current share price represents a smaller premium to Jinan's compared to what they were last year, Hwabao Securities analyst Yu Baoshan said.
Jinan Steel rose 10 percent to 3.95 yuan while Laiwu surged 10 percent to 8.32 yuan yesterday.
The revised plan also comprises a cash offer. Laiwu shareholders will get 7.18 yuan (US$1.09) for each share they hold, and those of Jinan Steel will get 3.44 yuan - both 20-day average prices before February 18 when their shares were suspended from trading.
But shareholders are likely to reject the unattractive cash option which is lower than current stock prices of the two mills.
Yu said the revised plan's timing for the merger is good as the A-share steel sector had gained 11.5 percent during the two mills' share suspension.
Jinan and Laiwu had cited changes in the macroeconomic environment and difficulties in the steel industry in August last year when they announced a delay in the merger.
Jinan Steel's annual crude steel capacity will rise to 16 million tons from 10 million tons after the merger, Guosen Securities said. Shanghai's Baoshan Iron and Steel Co, the nation's largest listed mill, produced 26.45 million tons of crude steel in 2010.
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