announces strategic acquisition of Fong’s Industries
Zhang Jie, the Chairman of China Hi-Tech Group Corporation (CHTC)
announced the acquisition of the controlling shareholding in
Fong’s Industries Co. Ltd. On 7th January 2011, China Hi-Tech
Group and Fong Sou Lam, the controlling shareholder, chairman
and executive director of Fong’s Industries signed a sale and
purchase agreement in which CHTC Group has agreed to acquire
from 37.7% of the issued share capital of Fong’s Industries Co.
Ltd. at HK$5 per share on or before the long-stop date of 7 May
2011. At the close of the unconditional mandatory cash offer on
3 June 2011, CHTC Group has acquired approximately 61%
shareholding in Fong’s Industries, a publicly listed company
with 48 years.
China Hi-Tech Group is the world’s second largest textile
machinery manufacturer, after Oerlikon for manufacturing of
complete sets of cotton and artificial fibre machinery. The
acquisition of Fong’s Industries is consistent with current
trend of the consolidation in the dyeing and finishing industry
as well as China Hi-Tech’s strategy to continuously expand and
strengthen its textile machinery manufacturing operations in the
field of dyeing and finishing machinery.
The dyeing and finishing machinery industry in the China was
somewhat decentralized with the top ten enterprises accounting
for 15% of the market share. Fong’s Industries and China Hi-Tech
Group were 1st and 2nd largest companies respectively.
Established in 1963 by Mr. Fong Sou Lam, Fong’s Industries
Group became a leading supplier of dyeing and finishing
machines. With textile dyeing and finishing machinery as its
core business, Fong’s Industries Group also carry on two
complementary business segments, Fong’s Steels and Tycon Alloy
in stainless steel trading and stainless steel casting
respectively. In 1990, Fong’s Industries was publicly listed in
HKSE and it was the first publicly listed company in the field
of dyeing and finishing machinery.
Today, Fong’s Industries holds a dominant and important
position in the global dyeing and finishing machinery industry.
As expressed by Mr. Zhang Jie, the acquisition is in line with
China Hi-Tech Group’s corporate strategic goal and its needs for
business development, China Hi-Tech will better utilize the
resources of Fong’s Industries. It will also enhance its
management efficiency and organizational capabilities to adapt
to both the internal and external challenges. What’s more, the
acquisition of Fong’s Industries has also provided a major
strategic significance to the textile industry in China. It
helps to achieve integration of high quality assets and to
better enhance the development of SOE in China. In particular,
the acquisition meets the national textile industry
revitalization plan and strengthens the competitive edges of
enterprises with leading position in the textile industry.
Additionally, the acquisition further expands the Fong’s
Industries Group’s business scale, enriches its product mix and
consolidates its business and operation modes.
China Hi-Tech Group believes that the aggressive acquisition
strategy around the world has fueled its rapid growth. Due to
the global financial turmoil in 2008 as well as the current
cyclical downturn of textile industry, the value of most
enterprises has been under-estimated even for those renowned
companies with advanced technology. Besides, the textile
machinery industry in most of the developed countries has
declined considerably. All the above factors will provide
excellent opportunities for China Hi-Tech to make acquisition
Following China Hi-Tech’s takeover, Mr. Fong Sou Lam intends
to continue to hold approximately 20% in Fong’s Industries. Mr.
Fong believes that the introduction of CHTC as the major
shareholder of Fong’s Industries will enable Fong’s Industries
to further enhance its market position and brand effect by
offering strong support to the company for its future