(Corrects 13th paragraph of March 1 story to say Shan is
chairman and CEO of PAG, not founder)
* Yingde shares up as much as 20 pct after PAG's bid for
* Offer may entice higher takeover bid-Oasis
* Yingde shares more than doubled since December
HONG KONG, March 1 (Reuters) - Hong Kong-based private
equity firm PAG has agreed to buy the 42.1 percent stake of the
three co-founders of Yingde Gases for $616 million,
the latest twist in a months-long battle for control one of
China's largest industrial gases company.
PAG signed a deal with Zhao Xiangti, Sun Zhongguo and Trevor
Strutt to buy their combined stake at a price of HK$6 ($0.7729)
per share, Yingde said in a statement on Wednesday. The
agreement will be suspended if they receive a competing offer at
least 5 percent higher than PAG's, or equivalent to HK$6.3 per
share, it said.
Shares of Yingde jumped as much as 20 percent to HK$6.40, a
21-month high, after they resumed trading on Wednesday,
following news of PAG's bid for the shares. The stock has more
than doubled since late December, when U.S. industrial gas maker
Air Products made a takeover approach of as much as $1.5
billion in cash for Yingde.
The shares later trimmed the gains to close up 17.5 percent.
"We believe that this is a positive development for
shareholders because it potentially sets a higher price for a
takeover – equal to or higher than HK$6.30 - whether that
ultimately is by PAG, Air Products or another bidder," Seth
Fischer, chief investment officer of Hong Kong-based activist
hedge fund Oasis Management Company, said in a statement.
Oasis had said on Monday it would seek a seat on Yingde's
Yingde's main products include oxygen, nitrogen, argon and
some specialty gases which it sells primarily to companies in
the steel, iron ore, chemicals and electronics industries. It is
an established leader in China in on-site industrial gas
production, with 69 gas facilities in 19 provinces, according to
November 2016 report by Macquarie Capital.
Over the past few months, the company has seen high drama.
Sun and Strutt, previously the Chairman/CEO and COO of
Yingde, respectively, were relieved from their posts during a
November board meeting that named Zhao chairman of the company
and have since been in a legal fight to get reinstated.
Yingde in January disclosed details of Air Products'
December offer after an inquiry from Hong Kong's Securities and
Futures Commission. It revealed that Air Products' initial
non-binding bid was for HK$5.5 per share, but it could raise it
to HK$6 if allowed to conduct due diligence on Yingde.
Yingde would help Air Products expand into emerging markets
and diversify its revenue mix, with a combination also helping
with synergies, according to a Jefferies report in January that
estimated the U.S. company could raise its bid as high as HK$8.8
per share "before the return outlook deteriorates below
PAG declined to comment, while Air Products didn't
immediately reply to a Reuters request for comment.
PAG, whose chairman and CEO Weijian Shan was previously at
TPG Capital LP, manages about $16 billion of capital, with
recent investments including the $3.6 billion purchase of
printer maker Lexmark International Inc last year. The firm
raised $3.6 billion for its second Asian buyout fund in January
While Yingde's shares have surged, its bonds have also
rallied in 2017, with hedge fund Oasis's board seat push viewed
positively by Yingde's bondholders.
Its bonds due 2020 have rallied over 25
cents since the start of the year and the bonds trade at 101/102
cents on the dollar now, significantly higher than the lows of
64 cents struck in March 2016. On Wednesday, these bonds rose 3
"The firm, with its activist bent, would be helpful to
provide checks and balances," independent research firm Lucror
Analytics said in a note, referring to hedge fund Oasis.
($1 = 7.7625 Hong Kong dollars)
(Additional reporting by Umesh Desai; Editing by Muralikumar