Hong Kong-based private equity firm PAG has struck a deal with the three co-founders of Yingde Gases to buy their stake in the firm for $616 million, the latest twist in a months-long battle for control one of China’s largest industrial gases company.
PAG signed an agreement with Zhao Xiangti, Sun Zhongguo and Trevor Strutt to buy their combined 42.1 percent stake at a price of HK$6 ($0.7729) per share, Yingde said in a filing to the Hong Kong stock exchange. The agreement would be suspended if they receive a competing offer at least 5 percent higher than PAG’s, or equivalent to HK$6.3 per share, the filing said.
The move followed an announcement by Hong Kong-based activist hedge fund Oasis Management Company Ltd on Monday that it would seek a seat on Yingde’s board as the company considers strategic alternatives, including an outright sale.
Sun and Strutt, previously the Chairman/CEO and COO of Yingde, respectively, were relieved from their posts during a November board meeting that named Zhao chairman of the company and have since been in a legal fight to get reinstated.
In December U.S. industrial gas maker Air Products sent a “letter of interest” to Yingde’s board indicating its intention to make a cash offer to buy the company.
PAG declined to comment, while Air Products didn’t immediately reply to a Reuters request for comment.
“We believe that this is a positive development for shareholders because it potentially sets a higher price for a takeover – equal to or higher than HK$6.30 – whether that ultimately is by PAG, Air Products, or another bidder,” Seth Fischer, chief investment officer of Oasis, said in a statement.