XINMAO Group’s financial adviser said yesterday that the group had Chinese bank financing lined up for its $1.3bn (£820m) offer for Dutch cable maker Draka, in a bid to dispel doubts over its proposed bid.
Xinmao had a commitment from “one of the larger banks in China to provide the funds as necessary” for the deal and had submitted a letter of commitment from the bank to Draka, Joseph Krant of Amsterdam-based Catalyst Advisors said yesterday.
A fragmented market has made Draka the darling of the cable manufacturing industry, with France’s Nexans, Italy’s Prysmian and China’s Xinmao all making approaches as they chase a slice of the demand for cables in anything from telecommunications to cars.
Draka is a market leader in elevator cables. It has designed and provided cables for the 58 lifts of the world’s tallest skyscraper – the 828 metre Burj Khalifa in Dubai.
“This is a formal offer. It’s as formal as the competitive offer from the Italians. Comments that Xinmao is not a serious contender are nonsense. We don’t underestimate the Chinese and I would recommend that others do not as well,” Krant said.
“We felt if we could acquire it, we could grow this company on growth in Asia-Pacific in optical fibres and optical communication, and double the size of the company in three to five years,” he said.
Earlier, Tianjin Xinmao Science & Technology, Xinmao’s listed arm, issued a statement saying its parent was trying to trump a lower offer for Draka by Italy’s Prysmian, currently valued at €810m (£686m).
Tianjin Xinmao Group will offer €20.5 per share, valuing Draka at about €1bn, the listed unit confirmed to the Shenzhen stock exchange.
City A.M. Reporter