DECEMBER 26 -- Power cable producer Jiangsu Zhongchao Cable (002471) plans to acquire three industry peers through a private placement, reports Shanghai Securities News, citing a company filing.

Zhongchao Cable plans to issue a maximum of 68 million shares at not less than 13.43 yuan per share in order to raise a maximum of 900 million yuan to acquire 51 percent stakes in Yufang Cable, Mingzhu Cable and Xizhou Magnet Wires, and to set up an operations center in Shanghai.

According to the filing, controlling shareholder, Jiangsu Zhongchao Group, plans to spend not more than 300 million yuan for the private placement.

Zhongchao Cable said the products, markets, and future development goals of the three companies are different, and the acquisitions will help to optimize its product mix and increase sales.

The company currently has insufficient production capacity, and could therefore utilize the capacity of the target companies to meet production needs and accelerate the delivery time.

Yuanfang Cable produces and sells cables such as 35KV cross-linked power cables, and is a high-technology firm based in Jiangsu province.

It recorded respective net profits of 11.72 million yuan and 13.27 million yuan on revenues of 376 million yuan and 350 million yuan in 2010 and during the first nine months of 2011.

Mingzhu Cable produces and sells power cables, electric wires used in electronic equipment, cables used in mines, and bare wire cables. It earned net profit of 10.96 million yuan on revenue of 385 million yuan during the first nine months of 2011.

Xizhou Magnet Wires produces and sells winding wires, paper-covered wires, and multi-split wires used in new power generation equipment and metro transportation.

Xizhou Magnet Wires is one of the companies designated by the State Grid to produce transposed conductors used in EHV and UHV transformers. It posted net profit of 3.19 million yuan on revenue of 629 million yuan during the first nine months of 2011.

In addition to the acquisitions, Zhongchao Cable intends to use the proceeds raised to produce energy-saving frequency conversion cables and optical fiber low-voltage cables.

Upon completion, the production facility is expected to generate average annual net profit of 53.33 million yuan on revenue of 526 million yuan.

The investment has an internal rate of return of 26.11 percent, and a break-even period of 5.55 years.

Shares of Zhongchao Cable were down 2.26 percent to trade at 14.24 yuan per share at 10:32 today.