CHINA’s Xinmao Group dropped its €1bn (£645m) bid for Dutch cablemaker Draka yesterday, leaving Italy’s Prysmian free to seal a lower-priced deal and form an industry leader.
Xinmao’s attempt to enter the fibre optic cable market by buying an overseas company
had been seen as a test of the ability of Chinese companies to complete such acquisitions.
But Xinmao, which gatecrashed Prysmian’s agreed €830m cash and share takeover of Draka in November, said it would be unable to launch its bid before Prysmian’s offer closed.
“Xinmao has after careful consideration regretfully concluded that its intended offer for Draka is no longer feasible,” the Chinese group said.
The group had faced an uphill battle to launch its offer in time as it waited for Chinese government approval for the move.
Prysmian’s offer, launched yesterday, is due to close on 3 February – 10 days before Xinmao had said it could put its bid to Draka shareholders.
Draka shares, which had been trading between the value of the Xinmao and Prysmian offers, closed down 8.4 per cent at €17.71, just below the implied value of Prysmian’s offer of €17.94. Prysmian bounced 9.7 per cent to €14.16 on relief it would not have to raise its bid to win over Draka investors.
Draka spokesman Michael Bosman said the company had noted Xinmao’s statement and “will move forward with Prysmian”.
Prysmian is being advised by Goldman Sachs, Mediobanca and Banca Leonardo. Draka’s financial adviser is JP Morgan and its legal counsel is Allen & Overy. Xinmao was advised by Catalyst Advisers.
City A.M. Reporter