WRI to Acquire Yangtze Communication
21st Century Business Herald, 2/08/12
A source within Wuhan Research Institute of Posts and Telecommunications (WRI) has confirmed that WRI will acquire Wuhan-based optical communication equipment, optical fibers and optical cables, light emitting diode (LED) and optoelectronic storage product manufacturer Yangtze Communication Industry Group (600345.SH). After the acquisition is completed, WRI will divide Yangtze Communication's assets among its two subsidiaries, Fiberhome Telecommunication Technologies (600498.SH) and Accelink Technologies (002281.SZ). WRI is currently in talks with Yangtze Communication's major shareholders, and has not yet drafted a detailed plan for the merger.
Fiberhome Telecommunication, Accelink, and Yangtze Communication halted trading on February 6. Fiberhome Telecommunication and Accelink have the same controlling shareholder - WRI's wholly-owned subsidiary Fiberhome Technologies Group - while Yangtze Communication's controlling shareholder is the State-owned Assets Supervision and Administration Commission (SASAC) of the Wuhan Municipal Government.
Yangtze Communication recorded operating revenue of RMB 791 mln and net profit of RMB 91 mln in 2010. Yangtze Optical Fiber and Cable, in which Yangtze Communication has a 25% stake, recorded RMB 4 bln in revenue and RMB 314 mln in profit in 2010, contributing RMB 78.5 mln in pre-tax revenue to Yangtze Communication's 2010 results.
The source said that Wuhan SASAC wants to sell Yangtze Communication because it has received no financing and had a mediocre performance during its more than 10 years on the Shanghai Stock Exchange, while WRI is interested in acquiring an equity stake, adding that Wuhan SASAC head and city mayor Tang Liangzhi was previously a technician at WRI.
Keywords: telecom Yangtze Communication 600345.SH hardware cable storage LED SASAC 600498.SH Wuhan Research Institute of Posts and Telecommunications 002281.SZ Accelink fiber optics M&A
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