Domestic

Xinmao says has funding for Draka deal

(Agencies)
Updated: 2010-11-30 15:10

Chinese group Xinmao said it had financing for its proposed 1 billion euro ($1.3 billion) offer for Draka, keeping alive prospects of a bid battle for the Dutch cablemaker.

Xinmao said on Monday Minsheng Banking Corp, China's No 7 listed lender, had confirmed its commitment to finance an offer for Europe's largest optical fiber-maker Draka, which has attracted three suitors in the space of five weeks.

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With no track record of international acquisitions, Xinmao's ability to show it can finance an offer was crucial to winning credibility against an 813 million euro cash-and-share offer from Italian company Prysmian, the world's second-largest cablemaker, which Draka accepted last week.

Draka shares ended flat at 19.11 euros, below Xinmao's proposed 20.5 euro bid but still more than 20 percent above the 16.68 euros value of Prysmian's offer at current market prices.

Draka had previously rejected a 731 million approach from French group Nexans, the world's top cable-maker.

One of the conditions of the Minsheng financing is a final agreement between Xinmao and Draka with respect to a merger protocol, according to the Chinese company's statement.

Xinmao said it would say in four weeks from November 22 whether it will apply for approval of an offer memorandum.

Minsheng, which attracted investors like George Soros and Singapore state fund Temasek TEM.UL to its $3.9 billion IPO, was prepared to be flexible with the type of financing.

Xinmao was founded in 2000 and employs around 30,000. The only other deal which a unit of Xinmao has done was to buy a 17 percent stake in a group company for about $6 million.

Xinmao said its bid for Draka aimed to use the latter's core technologies to develop the Chinese market, which accounted for 46 percent of global demand for fibre optic cable in 2009.