Chalco Will Buy 35.3% of Ningxia Power for $318 Million
Aluminum Corporation of China Ltd., the nation’s biggest producer of the lightweight metal, agreed to buy 35.3 percent of Ningxia Electric Power Group Co. for 2.02 billion yuan ($318 million) to increase energy self-sufficiency.
The company, known as Chalco, will buy 23.4 percent of Ningxia Power from Bank of China Group Investment Ltd. for 1.35 billion yuan and 11.9% from China Zhongtou Trust for 675 million yuan, according to statements to the Shanghai and Hong Kong stock exchanges yesterday.
“The proposed acquisition will fulfill the strategic transformation and structural adjustment targets of the company, accelerate industry allocations and improve its energy and resources self-sufficiency,” Chalco said in the statement.
Chalco, based in Beijing, is buying coal, iron ore and electricity assets after earnings from its aluminum unit halved last year on lower prices and higher costs. The company in April agreed to buy 29.9 percent of Mongolian coal exporter Winsway Coking Coal Holdings Ltd. for HK$2.39 billion ($308 million), and is seeking to take over SouthGobi Resources Ltd. (SGQ)
Chalco will become the biggest shareholder of Ningxia Electric after the acquisition, and intends to obtain majority control in the target, according to the statement.
The stock fell 2.9 percent to close at HK$3.30 in Hong Kong trading yesterday, before the announcement. Chalco has fallen 2.4 percent this year, compared with an 8.9 percent gain in the city’s benchmark Hang Seng Index.
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