Through extensional mergers and acquisitions, China Salt Chemical intends to further expand the scale and competitive advantages of its soda ash business, and enhance and consolidate the industry position of listed companies. If the acquisition of Qinghai Fatou Alkali Industry Co., Ltd. (hereinafter referred to as Fatou Alkali Industry) goes smoothly, the company will become the largest soda ash producer in China.
On the evening of July 28, Sinosalt Chemical announced that the company intends to privately issue shares to no more than 35 investors, and raise funds of no more than 2.8 billion yuan, all of which will be used to acquire 100% equity of Fatou Alkali after deducting issuance costs. The additional issuance adopts a competitive price issuance method, and the pricing base date is the first day of the issuance period.
According to reports, Qinghai SDIC has already publicly listed and transferred its shares in Fatou Alkali Industry through the Changsha United Property Rights Exchange. The reserve price for public listing is 2.83 billion yuan. During the listing period, it has solicited an intentional transferee of China Salt Chemical Industry. China Salt Chemical also agreed to transfer the equity assets in accordance with the law. China Salt Chemical said that the funds raised from this additional issuance will be used to pay the cash consideration for the acquisition of 100% equity in Fatou Alkali Industry, which will effectively alleviate the company's capital pressure, reduce financial expenses, and improve the company's capital structure.
The owner-operated business of launching alkali is the same as that of Kunlun Soda, a subsidiary of China National Salt Chemical Corporation. It is the production and sales of soda ash products (including light soda ash, heavy soda ash and edible soda). The production process is all ammonia-soda method. Fatou Alkali Industry currently has a soda ash production line (Phase I) with an approved production capacity of 1.4 million tons that has been put into operation, and it also has a soda ash production project (Phase II) under construction with a production capacity of 900,000 tons in Phase II.
China Salt Chemical said that after the completion of the acquisition, the company's soda ash production capacity, production scale, and business scale will be further expanded and become the largest soda ash manufacturer in China. By concentrating licensed production resources, listed companies complement each other's resource advantages in large-scale production, centralized procurement and sales, technological innovation, unified standards, and comprehensive management, and expand their scale advantages and competitive advantages, thereby enhancing and consolidating their industry status.
On the other hand, Fatou Alkali Industry and Kunlun Alkali Industry are located in Delingha City, Haixi Prefecture, Qinghai Province, and the factories are close to each other. After the completion of this acquisition, Sinosalt Chemical can make full use of its management experience in the soda ash industry to integrate the sales, procurement, production, transportation, and technological upgrading of Fatou Soda Industry and Kunlun Soda Industry to overcome disorderly competition and strengthen Competitiveness across the country; to realize the resource sharing of coal, limestone, water, raw salt and waste liquid comprehensive utilization, improve the company's overall operation level, give full play to the synergy effect, and create new profit growth points.
In 2020, affected by the epidemic, downstream enterprises in the soda ash industry are under-operating and limited in transportation, resulting in an imbalance between supply and demand in the soda ash market, and soda ash production companies generally experience declines in performance. According to the simulated income statement data of Fatou Alkali Industry, the loss of Fatou Alkali Industry in 2020 is 45,408,600 yuan. However, since the beginning of this year, the impact of the epidemic on the operating performance of the Alkali Industry has been gradually eliminated. From January to May this year, it achieved a net profit of 62,932,700 yuan. According to Zhongyan Chemical, after the completion of the acquisition, the company will integrate the Alkali Industry in the aspects of business, assets, finance, personnel, and institutions.
Source: Mobile Public Account
