China

Anhui Leimingkehua to Acquire Huai Mine Co. for RMB 20.3 Billion

Summary:

  • Anhui Leimingkehua (600985.SS), a Chinese company mainly engaged in the manufacture and distribution of civil explosive products, has agreed to buy Chinese coal company Huai Mine Co. for RMB 20.3 billion, according to Tencent.
  • The shares of Anhui Leimingkehua remain in a trading halt.

Why It Matters:

  • Huai Mine Co. and Anhui Leimingkehua are both controlled by Huaibei Mine Group. The group planned to launch an IPO of Huai Mine Co. in 2014 but failed due to the falling price of coal and the expected revenue drop of the company.
  • Anhui Leimingkehua will finance the deal by paying less than 3% of the stake in cash and issuing non-public shares to finance the gap. Anhui Leimingkehua will also raise RMB 700 million for business development.
  • During the first seven months of this year, Huai Mine Co. posted revenue of RMB 31.9 billion and a RMB 1.4 billion net profit. The book value of Huai Mine Co. is RMB 14.7 billion.