Asia Cement still chasing full control of Shanshui Cement

Asia Cement plans to raise convertible debt to gain full control of China Shanshui Cement. In a filing to the Taiwan Stock Exchange, the group said it hopes to raise US$400m from a zero-coupon issue, its first equity-linked deal in just over two years.

This will fund its proposed takeover of Shanshui in which it owns a 20.9 per cent stake. On Wednesday Asia Cement and state-owned China National Building Material (CNBM) announced a joint conditional cash offer to purchase all the outstanding shares in Shanshui Cement.The two companies hold a 62.4 per cent stake in China’s seventh-largest cement manufacturer by capacity. It is expected to cost them at least HKD13.3bn (US$1.72bn) to buy out the remaining shareholders. 

The proposed takeover has been triggered by disagreements with rival cement manufacturer Tianrui Cement, which increased its stake in Shanshui to 28.2 per cent in April, making it the largest single shareholder.

Tianrui tried to remove Shanshui’s chairman Zhang Bin and install new board members, but was defeated at an extraordinary general meeting at the end of July. It has subsequently said it will not participate in any general offer for the company.

Shanshui’s shares have been suspended since mid-April.