West China Cement Shares Plunge After Anhui Conch Deal Collapses


Updated Mon, 04 Jul 2016 15:47:03 GMT

West China Cement Ltd. fell 29 percent in Hong Kong after trading resumed following the collapse of a proposed deal with Anhui Conch Cement Co.

West China Cement dropped to HK$0.76 as of 9:37 a.m. for a market capitalization of HK$4.1 billion ($531 million), having lost half its value in the latest two trading sessions combined. The shares plunged by a record 33 percent June 28 amid speculation that the deal was in trouble. The stock was halted June 29 and resumed trading Monday.

Anhui Conch, China’s biggest cement maker, said in November a subsidiary plans toboost its stake in West China Cement to 51.57 percent from 21.17 percent in a HK$4.59 billion deal. Conditions including approval by China’s commerce authorities weren’t met by a June 30 deadline, the two companies said in a statement June 30 .The pair will “continue to explore future opportunities for business collaboration in different structures or manners,” they said.

West China Cement reported a loss of 309 million yuan ($46 million) last year, its first loss since 2008, according to data compiled by Bloomberg, in part due to asset write-offs and the yuan’s depreciation.

Anhui Conch’s higher credit rating would have helped bolster West China Cement’s ability to borrow, while a planned injection of production capacity could have boosted 2017 sales volume by as much as 60 percent compared with 2015, according to Bloomberg Intelligence.