Eaton Corp, a US-based diversified industrial manufacturer, said on Aug 24 it plans to pay up to US$63.6 million to acquire a Chinese electrical company to speed up its expansion in the nation's electrical equipment market. The US-based company has offered HK$1.49 (19 US cents) per share for Senyuan International Holdings Ltd, a Hong Kong-listed electrical equipment maker.
Eaton also agreed to increase the price to HK$1.62 (21 US cents) per share if it receives approval for 90 per cent or more of Senyuan's outstanding shares.
The higher offer will put Senyuan at a price of US$63.6 million, representing a premium of 20 per cent over the average closing price of its last 30 trading days. The offer is also 37.3 per cent higher than the Senyuan share issue price of HK$1.18 (15 US cents). Senyuan International suspended trading in its shares from Aug 21, pending an announcement in relation to a voluntary conditional cash offer.
Eaton said it had received irrevocable commitments to accept the offer from holders of 75 per cent of the outstanding Senyuan shares. The offer will be made through financial adviser DBS Asia Capital Ltd. "The acquisition of Senyuan will strengthen our medium-voltage electrical business by providing us with local channel access to the fast-growing China market and to an important manufacturing base for medium-voltage electrical products," said Randy Carson, senior vice-president of Eaton Corp.
Senyuan, located in East China's Jiangsu Province, makes vacuum circuit breakers and other electrical switchgear components. It had 374 million yuan (US$47 million) in sales in 2005. Senyuan is ranked as the third-largest domestic low-voltage equipment maker in the sector in 2005 in terms of total output, the company said on its website.
Eaton now has 18 joint ventures and wholly owned subsidiaries in China, manufacturing products ranging from electrical power distribution and control equipment to engine parts and hydraulic and fluid power systems. "Although China's contribution to our global business still remains small, we have been growing very fast here," said Victor Gao, president of Eaton (China) Investment Co Ltd.
The US company is expecting to maintain double-digit growth in China this year and will keep an eye on any possible acquisitions to further tap demand in the electrical product market.
In 2005, Eaton established a joint venture with Zhongshan Mingyang Electrical Applicances Co Ltd, a switchgear components maker in South China's Guangdong Province. Eaton had invested US$90 million in China by the end of 2005 and had more than 1.3 billion in sales in the nation.
In 2004, it moved its Asia headquarters from Hong Kong to Shanghai to better tap opportunities in the market. The US company operates in more than 125 countries and reported US$11.1 billion in global sales in 2006.
China's economy has been expanding rapidly over recent years, with hefty investment in fixed assets like roads and ports contributing a great deal to the growth. Meanwhile, surging demand is also luring international giants like German-based ABB and US General Electric into the nation's electrical equipment market. ABB said earlier this year it would invest US$100 million in China before 2008 and the nation is now its second-largest market in the world.
Source:佚名