Sinopipe enters MOU to buy China investment holding firm in reverse takeover

SINOPIPE Holdings has entered into an agreement with an independent third party to acquire a Chinese investment holding company via a reverse takeover, the pipe maker and distributor announced on Wednesday night. 

The company has been deemed as a cash company, with its shares suspended from trading since April 2, 2012. According to Sinopipe, the proposed acquisition, if undertaken and completed, is expected to result in a "very substantial acquisition" or a "reverse takeover". 

It added that it has been sourcing for potential investors with regard to the injection of new businesses, and that the proposed acquisition would enable it to recommence operations. The board is also of the view that the group's financial performance and position of the company will be strengthened with the acquisition. 

Sinopipe has entered into a memorandum of understanding (MOU) with independent third party Song Jianjun, who is the chairman and general manager of Shanxi Bibenet Information Technology Co.

Shanxi Bibenet is a China-incorporated investment holding company comprising three wholly owned subsidiaries, and two investment companies. The companies are principally engaged in the business of procurement trading and Internet bidding. 

As at Feb 20, Mr Song holds about a 85 per cent stake in Shanxi Bibenet. The remaining shares are held by 24 other shareholders, which include employees of the company and others. 

Consideration for the proposed acquisition will be determined based on the final valuation to be conducted by an independent valuer, and will be satisfied entirely by the issuance of new ordinary shares in the company, Sinopipe said. 

Following terms of the MOU, Sinopipe and Shanxi Bibenet shall be in discussion exclusively with each other for a period of six months from Feb 20, and shall not solicit any inquiries or proposals from any third parties with respect to any transactions similar to the proposed acquisition. The companies may also mutually agree to extend this exclusivity period for an additional three months.

Among other things, completion of the acquisition is subject to the completion of a restructuring exercise by Shanxi Bibenet, approval from Sinopipe's directors and shareholders, as well as a waiver from the Securities Industry Council to make a mandatory offer for Shanxi Bibenet, since its shareholding in the firm would cross the 30 per cent mark, should the acquisition be successful.