Domestic

China's Xinmao confirms 'uncertain' $1.3b Draka bid

(Agencies)
Updated: 2010-11-24 15:41

BEIJING - The listed arm of China's Xinmao Group confirmed on Wednesday that its parent aims to acquire Dutch cable maker Draka, but added that the $1.3 billion offer remains uncertain and pending Beijing's approval.

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Tianjin Xinmao Group will offer 20.5 euros per share, or about 1 billion euros ($1.34 billion), the listed unit said in a stock exchange filing. But the same statement says the offer totals more than 5 billion yuan ($753 million), without explaining the discrepancy. Xinmao said the two sides were "in detailed discussions about the deal" but still needed Chinese government approval.

"Whether the deal will go through is still uncertain," Xinmao said.

Xinmao said on Wednesday that the group has sent the offer to Draka's management board and supervisory committee. Draka executives have said they only have a press release from the company, and no formal offer.

Late on Tuesday, Draka said it would begin takeover talks with Xinmao, even as it described a previous offer from Italy's Prysmian as a sensible all-European combination.

Shares in Draka closed at 19.27 euros on Tuesday, while Xinmao Science & Technology shares were little changed, having earlier hit their highest since August 2009.

Prysmian's cash and share offer valued Draka's equity at just over 800 million euros.

Xinmao's statement pointed to the benefits of combining forces with Draka.

"The two companies have definite synergies in the optical communication industry," Xinmao said. "If we are successful in acquiring Draka, we will be able to use their core technologies in fibre optics products to develop the Chinese market."

The Xinmao group does business in a variety of fields including optical fibers and communications, property development, wind turbine blades and hotel services.

Calls to the company, based in Tianjin, went unanswered Wednesday.