Hengan Buys Majority Stake in Wang-Zheng

Hengan International has that it has acquired a 50.4% stake in Wang-Zheng Berhad and has made an offer to take over the remaining shares of the Malaysian company.

The deal was made through the Hong Kong-listed hygiene and tissue giant’s indirect subsidiary Hengan (Malaysia) Investments Company Limited.

The latter signed a sale and purchase agreement to buy 80 million shares in Wang-Zheng at Ringgit 1.14 per share, for a total of RMB 91.2 million ($21.4 million).

The sellers are Wang-Yheng’s largest shareholder, Wang-Zheng Resources Sdn Bhd, and three others. The acquisition of the majority stake triggered the mandatory offer requirement, under which Hengan (Malaysia) will extend an unconditional take-over offer to buy all the remaining ordinary shares in Wang-Zheng at the same price.

Listed on the Main Market of Bursa Malaysia Securities Berhad, Wang-Zheng manufactures and distributes disposable hygiene products including diapers, sanitary napkins and cotton buds. It is also a converter and distributer of tissue products.

Its products are sold domestically in Malaysia and also to other Asian markets such as Singapore, Thailand, Brunei, Hong Kong, Taiwan, Cambodia and India.

The company is also engaged in importing, processing and distributing various grades of paper and board as well as box making.

According to its annual report for the financial year ended 31 December 2016, its revenue hit a record of Ringgit 309.1 million in 2016, up 5.6% from the previous year. Meanwhile, its profit after taxation jumped by 33.1% to Ringgit 17.7 million.

Ranked as the second largest tissue producer in China, Hengan currently boasts a tissue capacity of approximately 1.26 million tonnes/yr with five tissue paper mills operating across the country.

It said in the announcement that the acquisition is part of its plan to expand its business operations and to diversify its revenue stream outside China. It also intends to maintain the listing of Wang-Zheng on the Malaysian market.