China says no application yet for Xinmao’s bid

By Shen Yan and Terril Yue Jones

BEIJING (BestGrowthStock) – China’s Ministry of Commerce (MOFCOM) said on Tuesday it has not yet received an application from Chinese group Xinmao for a proposed 1 billion euro ($1.3 billion) bid for Dutch cable maker Draka, but said it supports overseas investments by Chinese companies.

The statement was the first from China’s central government on the surprise bid by the obscure Chinese company, in response to a Reuters query from last week.

The Ministry of Commerce is the regulatory body that approves cross-border acquisitions. The deal would also require signoff from the National Development and Reform Commission (NDRC), the country’s top economic planning agency, since it would involve a great deal of foreign currency (Read more about trading foreign currency..

Some investors and analysts have been skeptical of the bid by the Xinmao Group, a murky, privately held company in Tianjin, southeast of Beijing, which does not have a track record of international takeovers.

The company has the backing of China’s Minsheng Banking Corp, however, which has committed to fund the deal.

Chinese companies have been trying to make inroads into overseas markets by acquiring foreign companies, but are frequently rebuffed by government intervention or investor jitters over being taken over by a Chinese enterprise.

Prysmian (PRY.MI: ) shares fell more than 1 percent on Monday after a Dutch newspaper said the Italian cable maker could be considering raising its 17.2 euro-per-share bid for Draka.

Xinmao’s bid is for 20.5 euros per share. The report in the Dutch financial daily Het Financieele Dagblad said Prysmian’s increase would still fall short of Xinmao’s level.

Attention is focused on the closely held Flint Beheer family fund, which owns 48.5 percent of Draka. Prysmian is trying to convince the Flint Beheer fund to accept its offer, said the newspaper, citing sources familiar with the matter.

Prysmian is the world’s second-largest manufacturer by revenue of steel cables used for elevators and in construction. Draka is No. 7 and also produces optic fibers, which is also among Xinmao’s businesses.

Draka already rejected a 730 million euro takeover bid from France’s Nexans (NEXN.PA: ), the world’s No. 1 cable maker by revenue.

(Additional reporting by Terril Yue Jones; Editing by Ken Wills)

China says no application yet for Xinmao’s bid