China's plastic manufacturer Kingfa Sci & Tech Co Ltd has entered into a definitive agreement to acquire 66.5 per cent stake in Chennai-based Hydro S&S Industries Ltd (HSSIL), a manufacturer of reinforced polypropylene compounds, for Rs 10.65 crore ($1.94 million) from the promoters of the company, as per a stock market disclosure.
Kingfa Sci has also filed for an open offer to acquire 16,65,874 more equity shares from public shareholders of HSSIL, constituting 26 per cent of the fully paid up equity share capital of the company at Rs 42.70 per share, aggregating Rs 7.11 crore ($1.29 million).
If the open offer is fully successful, Kingfa Sci will hold 92.5 per cent stake in HSSIL. This would be more than the minimum public holding norms of 25 per cent but would allow the Chinese firm to delist the company.
Shares of HSSIL were trading at Rs 16.22 per share, up by 4.98 per cent at 2 pm in a weak Mumbai market on Tuesday. The deal has been struck around 2.5x the market price which may help the acquirer to garner a good chunk of the shares of the small-cap firm.
Founded in 1983, HSSIL manufactures and supplies reinforced polypropylene compounds, thermoplastics elastomers and fibre reinforced composites. It sells its products under the brand name Hyprene. The firm is a part of the WS Group and is promoted by Murali Venkatraman. It employs 192 people and has a capacity to produce 30,000 tpa of plastic compounds. Its clients include automobile majors Maruti Suzuki and Hyundai.
Kingfa Sci manufactures modified plastics. Its products include flame retardant resins, reinforced and toughened resins, polymeric alloys, functional master batches, bioplastics and partial recycled resins which are used in automobiles, electronic appliances, industrial equipment, consumer goods, toys, packaging products, etc. The firm was founded in 1993 and is based in Guangzhou, China.