Hong Kong — Sinomax, which recently started construction of a plant in the US, has bought 51% of Chengdu Xingang which makes flexible polyurethane foam and furniture components in Chengdu, Sichuan.
Sinomax said the purchase fits its strategy of buying and collaborating with attractive companies that help to reinforce its position in the Chinese polyurethane foam market. It will, the company said, allow it to tap into the market for polyurethane foam in Chengdu and broaden the revenue sources of the group.
Sinomax will pay CNY 81.7m ($ 12.5m) for the stake and will fund it from its own internal resources and Chengdu Xingagn will have settled all its debts. It is expected that the deal will complete by 30 June 2016 at the latest. Sinomax is paying CNY 24.5m following the announcement in mid-February and will pay the balance after the deal completes. If the deal does not complete, Sinomax will get its money back, according to documents filed with the Hong Kong stock market.
The documents show that Chengdu Xingang made a profit of CNY 3.3m in 2015 compared to CNY 1.5m in 2014. the company's net assets increased by CNY 2.5 m to CNY 82m in the same period.
Sinomax has also recently decided to build and open a foam plant in La Vergne, Tennessee.