Air Products has made a move to acquire all the outstanding shares of Yingde Gases Group Company Limited.
The Tier One corporation has submitted a letter to the Chinese industrial gas outfit, setting forth a preliminary, non-binding indication of interest to takeover all of its outstanding shares.
The bid comes amidst an internal company feud between two groups of current and deposed Directors.
Yingde first announced plans to issue 378,000,000 new shares to Originwater Hong Kong Environmental Protection Co., Limited, under a general mandate on 6th November, 2016, but two ousted directors quickly submitted complaint letters to Chinese authorities opposing the decision.
Dubbed the ‘disgruntled Directors,’ former CEO Zhongguo Sun and former Chief Operating Officer Trevor Strutt engaged Anglo Chinese Corporate Finance, Limited, to submit a number of complaint letters to the Securities and Futures Commission (SFC) alleging that Originwater is acting “in concert” with current Chairman, Executive Director and substantial company shareholder, Zhao Xiangti – an action that Yingde described as a “surprising and reckless move.”
The Board removed Sun and Strutt from their roles as part of its Board and senior management restructure in November, 2016.
On 12th December, 2016, Sun and Strutt issued Yingde with a Requisition Notice, where they expressed interest in approximately 30% of the total issued share capital of the company. It also outlined Sun and Strutt’s Proposed Removal of Directors and Proposed Appointment of Director to obtain a de facto control over the management of Yingde.
The company said this proposal “is not in the best interest of the company” and would be “devastating” to its corporate governance. Yingde is in the course of obtaining legal advice.
“Although the Board (excluding the disgruntled directors), OriginWater and Zhao strenuously deny the allegation…due to the SFC’s ongoing enquiries on the allegation which may be time-consuming…the company is considering to restructure the proposed [shares] placing,” Zhao confirmed in a filing.
Yingde is the largest independent industrial gas supplier in the People’s Republic of China in terms of revenue. It produces, supplies and distributes a variety of industrial gas products to its onsite and merchant customers, with oxygen, nitrogen and argon the core products.
Its onsite supply business is the anchor underpinning its operations, accounting for approximately 83.7% of the group’s revenue in 2016, serving customers primarily in the steel, chemical and non-ferrous metals industries.
Yingde had a total of 69 gas supply facilities in operation and 11 under development as at June 2016. It sold 12,917 million Nm3 of industrial gases last year.
Air Products cautioned that at this stage, “There cannot be any assurance that such an agreement will be reached or, if such an agreement is reach, that a transaction will be completed.”