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Datang gets fired up with CNY 18bn acquisition
Posted on Thursday, 07 December 2017 11:29
Shares in Datang Power closed down 12.5 per cent after the Chinese power plant operator announced plans to acquire three, mostly loss-making, stations from parent China Datang (CDC) for a total CNY 18.13 billion (USD 2.74 billion).
The reasons and benefits of the asset transfer given in the statement include integrating the coal-fired facilities in Hebei, Heilongjiang and Anhui provinces to expand the listed flagship group’s scale and increase market share.
On the one hand, it will be able to improve electricity supply capacity and coverage in eastern, northern and northeast China by adding an extra 13.07 GW to its generating capacity.
However, on the other, it is taking on assets with an aggregate net loss of CNY 505.00 million in the first nine months of 2017, compared to a profit of CNY 1.87 billion in FY 2016 and CNY 2.67 billion in FY 2015.
Furthermore, it comes almost a year and a half after Datang sold off a huge loss-making portfolio of coal conversion projects to CDC for a token one yuan in order to refocus on power generation.
The aggregate value of this latest agreement makes it the tenth-largest purchase in China of 2017 – out of a total 5,358 acquisitions announced over the last 12 months – according to Zephyr, the M&A database published by Bureau van Dijk.
Breaking down the deal, Datang is taking on Datang Hebei Power Generation for CNY 4.44 billion, Datang Heilongjiang Power Generation for CNY 5.88 billion and Datang Anhui Power Generation for CNY 7.80 billion.
The Hebei province-based operator has total installed capacity of 2.95 million kW and total assets of CNY 8.43 billion and Heilongjiang has total installed capacity of 3.88 million kW and total assets of CNY 8.96 billion.
Anhui is the largest of the three, with installed capacity of 6.24 million kW and total assets of CNY 11.92 billion.
© Zephus Ltd