Shanghai Petrochemical Co has bought a Shanghai-based acrylic fibre plant for 38.8 million yuan (about HK$36.1 million), marking its first ever acquisition. The move comes after a placement of 400 million new shares, intended to fund the company's expansion, was shelved due to a falling stock price. Shanghai Petrochemical agreed to acquire the plant from Shanghai Jiushi Co by assuming the plant's long-term debts of 710 million yuan. Shanghai Jin-Yang Acrylic Fibre Plant, with assets of 850 million yuan, makes acrylic fibres with a design production capacity of 20,000 tonnes a year. Last year, the plant produced 25,800 tonnes of acrylic fibres, with gross profits of 1.88 million yuan on sales of 520 million yuan. 'As a new initiative in the company's capital expansion plan, the acquisition is expected to increase the company's market share and enhance competitiveness of its products,' the company said. Shanghai Petrochemical is engaged in a three-year, 4.7 billion yuan expansion programme, to be partly funded by the postponed placement. The company last month said in its offering document it was exploring possibilities of acquisitions, in addition to its investment in capacity expansion and technology upgrading. Shanghai Petrochemical produces 32 per cent or 67,000 tonnes of China's acrylic output and hopes to increase this to about 45 per cent or 92,000 tonnes with the acquisition of the Jin-Yang plant.
