West China Shares Halted Pending Statement on Anhui Conch Deal

  • Shares dropped as much as 46 percent in last hour of trading
  • Short interest in stock is highest in almost four years

West China Cement Ltd., whose shares tumbled by a record 33 percent Tuesday amid speculation a planned acquisition by Anhui Conch Cement Co. is facing headwinds, halted its stock from trading pending a statement on the proposed deal.

Trading was suspended starting 9 a.m., according to a statement to the Hong Kong stock exchange Wednesday. Anhui Conch, China’s biggest cement maker, said in November a subsidiary plans to boost its stake in West China Cement to 51.57 percent from 21.17 percent in a HK$4.59 billion ($592 million) deal that’s still awaiting approval by China’s Ministry of Commerce.

The plunge on Tuesday, the worse since West China Cement’s listing in August 2010, wiped out HK$2.8 billion of value. Volume was more than 11 times higher than average. The stock was little changed for most of the day before starting to tumble after 3:10 p.m.

West China Cement is committed to completing the acquisition and the company plans to issue a statement about the deal no later than June 30, Stephen Chu, a spokesman at West China Cement, said by phone Tuesday.

Short sellers had increasingly targeted the stock, with bearish bets climbing to 3.3 percent of West China Cement shares outstanding on June 24, the highest since 2012, according to the latest data by Markit Ltd. and Bloomberg data.

The company reported a loss of 309 million yuan ($46 million) last year, the biggest since 2008, in part due to plant assets write-offs and yuan depreciation. Anhui Conch’s higher credit rating would help bolster West China Cement’s ability to borrow, while a planned injection of production capacity should also boost 2017 sales volume by as much as 60 percent compared with 2015, according to Bloomberg Intelligence.