The Russian steel producer Evraz Group (Evraz) has announced the conclusion of a share purchase agreement with Singapore-listed Best Decade Holdings Limited (Best Decade) to acquire from the latter up to a 51 percent stake in Chinese flats producer Delong Holdings Limited (Delong) over an agreed period of time. The agreement is subject to antitrust clearance by China's Ministry of Commence and State Administration of Industry and Commerce.
The share purchase agreement between the companies includes an initial sale to Evraz of an approximate 10 percent stake in Delong (Initial Sale) at SGD 3.9459 ($2.79) per share. In addition, Best Decade has granted a call option to Evraz to acquire a 32.08 percent stake of Delong's shares (Call Option) at SGD 3.9459 ($2.79) per Delong share that is conditional upon the satisfaction of several criteria. The Call Option is commenced upon the completion of the Initial Sale and ending after a date following the six-month period after February 18, 2008. On the other hand, Evraz has granted Best Decade with a put option (Put Option) with respect to a 32.08 percent stake in Delong, which can be exercised in the same period of time as the Call Option. The price of the Put Option is equal to SGD 3.9459 ($2.79) per Delong share.
Moreover, Evraz has concluded an agreement with Best Decade's beneficial shareholders to acquire an additional 8.97 percent stake in Delong.
Following the successful completion of these three transactions, Evraz will control approximately a 51.05 percent stake in Delong.
According to Singapore Code on Takeovers and Mergers, Evraz will have to make a mandatory offer for the remaining Delong shares upon the exercise of the Call Option or Put Option.
The maximum consideration payable by Evraz will be approximately $1.494 million.