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Xinmao continues to pursue Draka
By Greg Roumeliotis and Terril Yue Jones |
December 21, 2010, Tuesday
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CHINA'S Xinmao Group will press ahead with a 1 billion-euro (US$1.3 billion) bid for Dutch cable maker Draka, but warned that the timing of a competing offer from Italy's Prysmian could yet derail its takeover plan.
Draka dismissed the Chinese group's latest overture as unofficial and said it was sticking to Prysmian's cash and share bid. Draka has already endorsed this deal, valuing the Dutch cable maker at around 830 million euros.
But Xinmao's persistence could yet force a higher offer from the Italian company, which declined to comment on Xinmao's move.
"I think they will have to increase their bid ... All cash may be part of the deal. Everyone would be happy if it raises its bid a little," a Milan broker said.
Xinmao said in a statement it would submit an offer request to the Dutch stock market regulator by February 14, adding it was convinced it would get the backing of key Draka investor Flint Beheer, a family-controlled fund which has a 48.5 percent stake.
However, Xinmao, attracted by Draka's leading position in optical fiber - No. 1 in China and Europe and No. 4 in the United States -- conceded that a lot depended on the length of the tender period for Prysmian's agreed deal with Draka.
"After our constructive discussions with Draka's management, l am even more convinced that Draka will thrive as part of the Xinmao group, backed by the expertise of Draka's management and Xinmao's management," Xinmao Chairman Du Kerong said yesterday.
In a move that could prove crucial for its bid, Xinmao said financing from China Minsheng Banking Corp no longer depended on a merger protocol with Draka, but that the bank would still need to be satisfied with the due diligence.
In an Amsterdam press conference presentation Xinmao repeated it had a 1.1 billion-euro commitment from Minsheng, adding it did not expect to run into any competition issues and that it expected no lay-offs at Draka if it was successful.
It also said it did not anticipate any closures or relocations of Draka activities as a result of the bid.
But in a nod to critics who have been skeptical of its credentials, Xinmao also said it had appointed Rabobank International as an M&A advisor and debt co-ordinator alongside little-known Amsterdam-based Catalyst Advisors.
Xinmao gatecrashed Prysmian's agreed cash and share takeover of Draka in November with its own cash bid, highlighting the growing influence and ambition of Chinese companies.
Investors remain skeptical its deal can be completed.
"Is it likely that Xinmao obtains all approvals before January 26 (when Draka holds its EGM) and is able to change the articles of association at the EGM? It is possible but not very likely," SNS Securities wrote.
Draka has accepted Prysmian's 833 million-euro offer to form the world's largest supplier of steel cables used in elevators, manufacturing and construction.
Draka dismissed the Chinese group's latest overture as unofficial and said it was sticking to Prysmian's cash and share bid. Draka has already endorsed this deal, valuing the Dutch cable maker at around 830 million euros.
But Xinmao's persistence could yet force a higher offer from the Italian company, which declined to comment on Xinmao's move.
"I think they will have to increase their bid ... All cash may be part of the deal. Everyone would be happy if it raises its bid a little," a Milan broker said.
Xinmao said in a statement it would submit an offer request to the Dutch stock market regulator by February 14, adding it was convinced it would get the backing of key Draka investor Flint Beheer, a family-controlled fund which has a 48.5 percent stake.
However, Xinmao, attracted by Draka's leading position in optical fiber - No. 1 in China and Europe and No. 4 in the United States -- conceded that a lot depended on the length of the tender period for Prysmian's agreed deal with Draka.
"After our constructive discussions with Draka's management, l am even more convinced that Draka will thrive as part of the Xinmao group, backed by the expertise of Draka's management and Xinmao's management," Xinmao Chairman Du Kerong said yesterday.
In a move that could prove crucial for its bid, Xinmao said financing from China Minsheng Banking Corp no longer depended on a merger protocol with Draka, but that the bank would still need to be satisfied with the due diligence.
In an Amsterdam press conference presentation Xinmao repeated it had a 1.1 billion-euro commitment from Minsheng, adding it did not expect to run into any competition issues and that it expected no lay-offs at Draka if it was successful.
It also said it did not anticipate any closures or relocations of Draka activities as a result of the bid.
But in a nod to critics who have been skeptical of its credentials, Xinmao also said it had appointed Rabobank International as an M&A advisor and debt co-ordinator alongside little-known Amsterdam-based Catalyst Advisors.
Xinmao gatecrashed Prysmian's agreed cash and share takeover of Draka in November with its own cash bid, highlighting the growing influence and ambition of Chinese companies.
Investors remain skeptical its deal can be completed.
"Is it likely that Xinmao obtains all approvals before January 26 (when Draka holds its EGM) and is able to change the articles of association at the EGM? It is possible but not very likely," SNS Securities wrote.
Draka has accepted Prysmian's 833 million-euro offer to form the world's largest supplier of steel cables used in elevators, manufacturing and construction.
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