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Delong unit to buy 51% stake in Anhui steel maker

A UNIT of Delong Holdings has agreed to acquire 51 per cent stake in Anhui Shoukuang Dachang Metal Materials Limited Company from Beijing Shougang Mining Investment Co.

Delong Steel had on May 10 entered into a binding memorandum of understanding (MOU) with the vendor.

The remaining 49 per cent in the target company is owned by Anhui Dachang Mining Group.

"The target company will be principally engaged in the manufacture and sale of steel bars and wire rods," Delong said. "The target company is currently constructing an integrated steel plant, which will upon completion, result in the target company generating an annual production capacity of approximately 3.05 million tonnes. The construction has stopped since 2014 due to insufficient funding."

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The group explained that the proposed acquisition presents a good opportunity for the group to expand its core business, and serves as a new engine of growth.

Delong Steel further agreed to pay the vendor a sum of 10 million yuan (S$2 million) within seven working days after signing the MOU as a form of guarantee that Delong Steel shall participate in the bidding exercise.