H share takes $37m stake in Zhejiang acrylic plant

H share Shanghai Petrochemical has paid 40 million yuan (about HK$37.23 million) for a 75 per cent stake in Zhejiang Acrylic Fibre Plant, as part of the mainland's mergers and acquisitions drive among state-owned enterprises.

The company said it would pay for the acquisition from existing resources without the need for additional financing.

'The directors of the company believe that the acquisition is a good opportunity of expansion . . . and will consolidate [our] leading position in acrylic production in China, increase market share of its product and enhance its competitiveness in the market,' Shanghai Petrochemical said.

The rest of the plant is controlled by Zhejiang Province Economic Construction and Investment Co and Ningbo City Economic Construction and Investment Co.

The Zhejiang plant, which started trial operations in 1995, has an annual capacity of 30,000 tonnes of acrylic fibre and 10,000 tonnes of acrylic top.

The plant is undergoing renovation to increase its production.

The company said that, after the acquisition, the plant would enjoy certain preferential policies.

These would include a waiver of interest payable on loans, exemption from income tax for two years and a 50 per cent reduction of income tax for the following three years.