SIIC Environment Holdings Ltd has proposed to acquire China-based Fudan Water Engineering & Technology Co water treatment firm at a price tag of RMB1.55 billion ($250 million), according to an announcement the company made on the Singapore Exchange.
The amount includes RMB479.2 million of debt held by the target company’s controlling shareholder, which SIIC agreed to pay off.
SIIC will pay about 10% of the total consideration in cash and the rest in shares through the issuance of 1.56 billion shares at 13.2 cents each, a discount to the stock’s March 24 closing price of 15 cents.
The company, a water treatment and management specialist, will take a loan from its major shareholder Shanghai Industrial Holdings to fund the cash portion of the payment.
SIIC believes that the acquisition will be in the best interests of the group, which has been an active investor and operator of water and environmental related assets. The target company, Fudan Water had earnings of more than RMB89.4 million last year.
Fudan Water, has 10 water treatment projects in Shanghai city and the provinces of Jiangsu, Zhejiang and Guangdong provinces in China and the proposed acquisition is a strategic addition and complementary to the group’s existing business and operational capabilities, it said in a regulatory filing.
“In addition, the location of the target group has a strategic significance to the group as it would potentially serve as a platform for the group to secure more opportunities in the respective regions,” SIIC added.
SIIC Environment shares ended flat at 15 cents yesterday.