The Next Big China TiO2 Merger? Jilin Gpro Suspends Trading
GUANGZHOU, China - Jilin Gpro announced a trading suspension that took effect on May 18, 2015. Market intelligence firm CCM, Guangzhou, China, believes that the suspension could be a signal Jilin Gpro is expecting to confirm a big mergers and acquisitions (M&A) deal in the near future, with Jiangsu Zhentai, a subsidiary of Jiangsu Taibai, as the most likely target.
On the evening of May 17, Jilin Gpro Titanium Industry Co. Ltd. (Jilin Gpro) announced a trading suspension to take effect the next day, citing company activity as the reason for the move. The company promised to release more information about its activities shortly.
Jilin Gpro’s stock price had soared over 34 percent during the previous 10 days, from $2.62 (RMB16.00) per share on May 7 to $3.49 (RMB 21.34) per share on May 17, which CCM believes is an indication that a merger is soon to be announced.
Though no official announcement has been released, CCM believes that Jiangsu Zhentai Chemical Co. Ltd. (Jiangsu Zhentai), a subsidiary of Jiangsu Taibai Group Co. Ltd. (Jiangsu Taibai), is the most likely target for a merger.
A deal between Jilin Gpro and Jiangsu Zhentai has been expected since early 2013, when the Zhenjiang City local government in Jiangsu Province organized an assets recombination program encouraging local companies to attract investment through mergers and acquisitions. At that time, Jilin Gpro announced that it would invest over $1.63 billion (RMB10 billion) in Zhenjiang City over the next three years.
Rumors of a deal were revived again in December 2013, when CCM heard from numerous sources inside China’s TiO2 industry that Jilin Gpro was on the verge of acquiring Jiangsu Taibai. Employees of Jiangsu Taibai even claimed at the time that the purchase had been finalized.
However, no official announcement of the deal has ever been released. In September 2014, several senior officials within one of Jilin Gpro’s competitors informed CCM that a deal had nearly been completed but that Jilin Gpro was hesitating due to the losses being made by Jiangsu Taibai. Jilin Gpro refused to comment on these assertions.
It is possible that the merger of Henan Billions and Lomon, two of China’s largest TiO2 producers, finally convinced Jilin Gpro to complete the acquisition. Once the Henan Billions-Lomon merger is finished, the new company will have a combined production capacity of 520,000 t/a, making it by far the largest producer in China and the fourth-largest producer worldwide.
By contrast, Jilin Gpro currently operates 100,000 t/a of sulfate process capacity, with another 80,000 t/a sulfate process facility expected to be put into production later this year. If the company acquires Jiangsu Taibai as expected, the company’s total capacity will rise to 260,000 t/a, making it the second-largest producer in China after Lomon.