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 worldwide.

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 development.