Air Products on Friday released some terms of its proposal to acquire Yingde Gases Group, after initially confirming its interest in an acquisition on 9 January.
In the proposal letter—which does not constitute a definitive offer—Air Products stated a preliminary offer of HK$5.50/share for Yingde, representing a premium of approximately 92% to the company’s closing price on 23 December 2016, the last day of trading before the letter’s delivery. A transaction at this price values Yingde’s equity at approximately HK$10.4 billion (US$1.4 billion). Yingde reports total debt of about $1.3 billion as of 30 June, yielding an enterprise value of $2.7 billion. Air Products also says it could raise the offer price to HK$6/share if permitted to conduct a customary due diligence on Yingde.
Air Products says certain conditions, such “satisfactory” due diligence results, must be met before it will make a firm offer. Air Products also says it plans to finance the acquisition with “existing cash and internal financial resources.”
Yingde Gases says it is the largest industrial gas player in China, with 2015 revenue of 7.9 billion renminbi ($1.2 billion). As of 30 June 2016, Yingde had 69 gas supply facilities in operation and 11 facilities under development. Last year, Air Products’ revenue in China was about $1 billion, or about 11% market share, while Yingde’s China market share is approximately 14%.
By Jing Chen
Source: Chemical Week
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