Deal Collapses for West China Cement After Record Share Plungeby
Conditions for acquisition by Anhui Conch Cement weren’t met
West China shares plunged by a record 33 percent on Tuesday
West China Cement Ltd., whose shares tumbled by a record in Hong Kong this week, said on Thursday that a deal for the company to be acquired by Anhui Conch Cement Co. had collapsed.
Conditions including approval by China’s commerce authorities weren’t met by a June 30 deadline, the two companies said in a joint statement to Hong Kong’s stock exchange. The pair will “continue to explore future opportunities for business collaboration in different structures or manners,” the firms said.
West China Cement’s shares tumbled by a record 33 percent Tuesday amid speculation that the deal was in trouble. Anhui Conch, China’s biggest cement maker, said in November that a subsidiary planned 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.
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 data by Markit Ltd. and Bloomberg data.
Last year, West China Cement reported a loss of 309 million yuan ($46 million), its biggest since 2008, in part due to plant assets write-offs and yuan 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.
West China Cement’s shares will resume trading Monday.