China Merchant Industry Holdings (CMIH) has launched a formal takeover bid for AVIC International Maritime Holdings.
The Hong Kong company has offered 15 Singapore cents (10.8 US cents) per share for the Singapore-listed takeover target.
The offer price represents a 37.6% premium over AVIC Maritime’s share price on the last trading day before the offer was made.
AVIC International Holdings Limited, which holds a 73.8% stake in AVIC Maritime, has irrevocably undertaken to accept the offer.
CMHI said the rationale for the offer was the potential synergies that could be realized from the c ombination of the complementary businesses.
It said these included cross-selling to an enlarged customer base, economies of scale, improvement of productivity and cost efficiency, as well as the sharing of domain knowledge such as know-how and best practices.
News of a possible tie-up between CMIH and AVIC Maritime emerged in early July in what was seen as another round of consolidation in the Chinese shipbuilding sector.
CMIH is already the third-largest state-run shipbuilder in China, after the combined CSSC and CSIC, and Cosco Shipping Heavy Industry.
Earlier this month AVIC Maritime posted a 15% fall in its second quarter net profit on the back of a weaker shipbuilding market.
Net income was CNY 9.7m ($1.4m) versus the CNY 11.4m achieved 12 months earlier, while revenue fell 16% year-on-year to CNY 127.9m.
It attributed this to a decline in revenue from its ship design service due to a lack of new shipbuilding construction contracts.
