Chinese conglomerate Xinmao Group yesterday announced it still intends to bid EUR 1 bln to acquire Dutch cable manufacturer Draka Holdings, but faces competition from a counteroffer by Italian cable maker Prysmian.
Following the completion of due diligence work, Xinmao must submit an offer to Dutch stock market regulators by February 14, 2011. According to Dutch law, Xinmao was required to announce when it would submit a bid by Monday, December 20, or withdraw its offer.
Last week, Draka expressed concerns about how Xinmao will finance the deal, as well as whether it can successfully receive government approval.
Tang Ping, securities representative of Xinmao Group's fiber optics subsidiary Tianjin Xinmao S&T Investment (000836.SZ), said that should the acquisition succeed, Xinmao will acquire the technology to manufacture optical fiber preform, a key component in fiber optic cables. But currently the company has plans to merge Draka with Xinmao S&T in the three months immediately following a successful acquisition.
However, officials at China's Ministry of Commerce and Ministry of Industry and Information Technology (MIIT) have yet to receive an application to acquire Draka from Xinmao.