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Shanshan leaps after Itochu takeover talks

NINGBO Shanshan Co shares jumped by the daily cap yesterday after saying Itochu Corp of Japan is in talks to buy up to a 30-percent stake in its parent company Shanshan Group Co.

The Chinese garment maker said Shanshan Investment Holding Co, which owns the Shanshan Group, may sell a 30-percent stake in the company to Itochu, according to a statement filed with Shanghai's stock exchange.

The Shanghai-listed company did not disclose details of the deal but Nikkei English News reported yesterday that Itochu will buy a 28-percent stake in Shanshan Group for about 10 billion yen (US$111 million) as soon as next month, without naming the sources.

Shanshan Group holds 132 million shares of the company, accounting for 32.09 percent of the total stake. Its stock surged by the 10 percent daily cap to close at 8.13 yuan (US$1.20), marking the highest close since August 6 when it ended at 8.2 yuan. The Shanghai Composite Index closed 1.78 percent higher yesterday.

The financial crisis sweeping the globe and the appreciating yuan have hurt the export-oriented textile industry and forced out factories relying on overseas markets.

Ningbo Shanshan Co saw its shares tumble 85 percent from a record high of 27 yuan last year to a historic low of 4.04 yuan in November amid increasingly squeezed profit margins.

Itochu Corp of Japan, which started as a textile maker and grew to be a global leading textile seller, is eyeing acquisition opportunities.

Ningbo Shanshan mainly deals in garments and lithium batteries. Garment sales for the first half of last year grew 26.08 percent to 661 million yuan.


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