Jinan Steel, Laiwu Steel announce stock-swap merger, resume trading
Shanghai. April 14. INTERFAX-CHINA - Jinan Iron Steel Co. Ltd. (Jinan Steel) and Laiwu Steel Co. Ltd. (Laiwu Steel) on April 13 announced the details of their upcoming merger and resumed trading on the Shanghai Stock Exchange.
The two companies suspended trading on Feb. 18 during merger talks. The deal remains subject to shareholder approval.
Both firms saw their shares rise by the daily limit of 10 percent the day of the announcement. The following day, Jinan Steel shares again hit the daily limit to end at RMB 4.35 ($0.67) per share, while Laiwu Steel's rose 9.98 percent to end at RMB 9.15 ($1.40).
According to the merger plan, Jinan Steel will acquire Laiwu Steel through a stock swap, exchanging 2.43 shares for each Laiwu Steel share.
Additionally, Jinan Steel will transfer 405 million shares to its parent company, Jinan Iron Steel Group Co. Ltd., and issue 668 million shares to Laiwu Steel's parent company, Laiwu Iron Steel Group Co. Ltd. The stock is valued at RMB 3.44 ($0.53) per share.
Current Laiwu steel shareholders have the option of a cash offer of RMB 7.18 ($1.10) per share as an alternative to receiving Jinan Steel stock. Jinan Steel shareholders can exchange their stock for RMB 3.44 ($0.53) per share.
Once the transaction is complete, the new company will operate under the name Shandong Iron Steel Co Ltd.
This is the third time Jinan Steel has attempted a merger with Laiwu Steel. The previous two attempts were blocked by Laiwu Steel shareholders.
- KHM