Red-chip China Merchants Holdings (International) is to take up an 11.6 per cent interest in Shenzhen International Holdings.
Managing director Sun Yin said the company - which has interests in coating product manufacturing, shipping and toll roads - would benefit from Shenzhen International's more diversified construction materials production base.
The HK$408.19 million consideration will be paid for the purchase of China Merchants' 16.02 per cent stake in China Southern Glass Holdings, which has A and B shares listed on the Shenzhen Stock Exchange.
This will boost Shenzhen International's stake in China Southern Glass to 39.6 per cent. It will issue 259.99 million new shares, or 11.6 per cent of its enlarged issued share capital, to China Merchants at HK$1.57 each. The issue price is a discount of about 10 per cent to the average closing price of HK$1.75 for the five trading days to yesterday.
The company said it would take up its full entitlement of about 38.86 million shares in a three-for-10 rights issue offered at four yuan a share by China Southern Glass on July 16. It was considering various financing methods to pay for the rights share of 155.4 million yuan (about HK$144.36).
Director Liu Zhihe said it intended to further increase its stake in China Southern Glass which had been doing well despite adverse market conditions.
