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The eBearing News
November 4, 2003
FAG Finalizes Plan to Acquire
$50 Million Share of Shanggong
copyright © 2003 eBearing Inc.
In a deal termed "innovative, by Chinese standards," FAG Kugelfischer Georg Schaefer AG (Germany,
a division of INA Holding KG, Germany) is acquiring approximately 100 million "B" shares of
Shanggong Company Ltd. (China) for USD $50 million.
INA/FAG is the world's second-largest bearing manufacturer. Shanggong is China's largest manufacturer
of domestic and industrial sewing equipment, with over 100 different products exported to over
50 countries. Annual sales are approximately $100 million, with exports accounting for
about half. Since 1997, the company's shares have traded on the Shanghai stock
exchange; its A shares are primarily state-owned, while there are currently three B share holders.
Originally, the new "B" share placement apparently involved FAG investing $24 million, with other
companies taking $26 million.
• article: Shanggong investing $24 million with FAG
However, the latest publicized iteration, apparently as approved by China's Securities Regulatory Commission,
has FAG acquiring all $50 million itself.
The "innovative" part of the deal then will follow, as Shanggong uses approximately $24 million to acquire FAG's
Duerkopp Adler sewing machine and industrial conveyor division. Essentially, this creates a de facto joint
venture between FAG and Shanggong, at the value of Duerkopp Adler. It allows Duerkopp Adler to leverage
Shanggong's market position in Asia and Shanggong to offer more options to its customers.
In late 2000, eBearing reported FAG's decision to sell off Duerkopp Adler after returning the
division to profitability.
• article: FAG divesting Duerkopp Adler
Although we think of FAG as a bearing manufacturer, it in fact started as a sewing machine repair
shop in the late 1800's.
FAG is acquiring the shares in what amounts to a private placement and ownership swap, concepts
almost unknown in China's equity markets. Until early 2001, B shares were only open to foreign
investors; they happen only in U.S. dollars and Hong Kong dollars.
If the deal goes through as approved by regulators, it would mark the first issuance of B shares
by a Chinese company in over two years. Shanggong currently has three B share holders, all
foreign-investment arms of private Wall Street banks.
Nantang Securities, the Shanghai-based underwriter, said, "The share placement will take place
as soon as possible. Using private placements and share swaps is an innovative tool to make an
acquisition in China."
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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