Swedish paper company SCA is bidding for a controlling stake in Vinda International, a Hong Kong-listed maker of pocket tissues and other paper products.
SCA bought 21.7% of Vinda in 2007 and is now offering HK$11 a share to the remaining shareholders, which include Invesco, Morgan Stanley, New China Capital Management, Skagen and Value Partners.
Fu An International, the biggest shareholder, owns 23.8% and is controlled by Vinda’s co-founders, Chao-wang Li and Yi-fang Yu. It is reportedly committed to selling a 2.1% stake.
SCA’s bid represents a premium of roughly 34% over Vinda’s average traded level during the past month and values the company at about $1.4 billion.
However, the HK$11 offer price is still far below the stock’s 52-week high of HK$13.76. The company has suffered from a familiar set of problems in China: overcapacity within the industry, fierce competition and a damaging price war.
SCA has said in the past that it wants to expand into nappies, sanitary products and tissue paper in China, India and Latin America.
“Vinda is a strong player in the Chinese tissue market and has demonstrated healthy growth and profitability,” said Jan Johansson, SCA’s chief executive. “As a majority shareholder, we would see the potential to further strengthen the company to ensure its future competitiveness.”
In addition to tissues, Vinda’s business also includes trading of wood pulp, machinery and household consumable paper, as well as property investment. It distributes its products throughout China and the rest of the world.
SCA says that a complete prospectus for the offer will be presented to shareholders by the end of September, and the transaction is expected to be finalised in the fourth quarter of this year.
Vinda will remain listed in Hong Kong.
JP Morgan advised SCA.
