China’s government-owned power equipment manufacturer, Dongfang Electric Corp., plans to list in the stock market in its entirety by merging its core assets with Dongfang Electrical Machinery Co., a subsidiary that already is listed on the Hong Kong and Shanghai exchanges.
China Daily reported Dongfang Electrical Machinery is to buy a 68.05 percent stake in Dongfang Boiler (Group) Co. Ltd. and 100 percent of Dongfang Turbine Co. Ltd. from the government-owned parent, Dongfang Electric Corp., for 12.18 billion renminbi (US$1.58 million). It is to spend another 2.83 billion renminbi (US$369 million) to buy the remaining Dongfang Boiler shares from other shareholders.
Dongfang Electrical Machinery said 8.9 billion renminbi would come from issuing 367 million A shares at 24.17 renminbi (US$3.15) per share to the parent firm, with the remaining 15.01 billion renminbi (US$1.95 billion) to be paid in cash installments.
Upon completion of the deal, Dongfang Electrical Machinery is to be renamed Dongfang Electric Co. Ltd. The combined firm will produce coal-fired, gas-fired, hydroelectric, nuclear, and wind power generators.
China is encouraging its government-owned companies to conduct mergers and acquisitions and stock market listings to improve their international competitiveness.
Last year, Dongfang said it plans to expand its hydropower, overseas, and other high-growth businesses to offset expected slower growth for thermal power units in China. (HNN 7/31/06)