Shandong Dongshun Affiliate Buys Cigarette Packaging Paper Converter

Chinese tissue paper and hygiene product producer Shandong Dongshun Paper Group affiliate Champion Alliance International Corporation has completed the acquisition of Hong Kong-listed Mengke Holdings, a cigarette packaging paper converter based in Hubei province.

Shandong Dongshun’s founder and chairman, Chen Shuming, is the sole owner of Champion Alliance International.

At the end of October, Champion Alliance and Mengke Holdings jointly announced that the former had completed the acquisition of a 75 percent stake (375 million shares) in the latter at HK$1.42 per share for a total price of HK$532.5 million ($68 million).

The move triggered a mandatory offer requirement, under which Champion Alliance was obliged to extend an unconditional offer to buy all the remaining shares in Mengke Holdings at the same price.

By the end of trading on December 10, when the offer expired, Champion Alliance had bought another 7.22 percent stake in Mengke Holdings.

In late December, Mengke Holdings’ newly appointed board, chaired by Chen Shuming, proposed renaming the company Champion Alliance International Holdings.

Mengke Holding was listed on the Stock Exchange of Hong Kong in November 2016. It is primarily engaged in the processing of transfer metallized paper and laminated metallized paper for cigarette packaging.

It operates a plant in Yichang city, Hubei province with a processing capacity of approximately 222 million m²/yr.

According to its annual report for 2017, its revenue was RMB 238.3 million ($34.5 million), down 23.3 percent from 2016. Its gross profit dropped 30.4 percent to RMB 44.9 million.

The company ascribed the declines to the Chinese government’s tightened control of tobacco consumption and limits on cigarette packaging costs.

With its affiliate taking over a Hong Kong-listed company, Shandong Dongshun will leverage the capital market to build itself into a world-class enterprise, its chief executive officer said earlier this month.

Founded in 2000, the group currently operates two tissue paper mills; one in Tai’an, Shandong province, and the other in Zhaodong, Heilongjiang province, with a combined capacity of around 280,000 metric tpy.

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