PATEO Connect Technology (Shanghai), the Hong Kong-listed provider of in-car connectivity systems, agreed on 21 August to buy 20% of Guangzhou Seagull Residential Industry from its controlling shareholder for RMB 800m, taking control of the Shenzhen-listed company.
Why PATEO Connect Technology (Shanghai) Co., Ltd. is buying Guangzhou Seagull Residential Industry Co., Ltd. (20%)
PATEO said it was acquiring control on the basis of Seagull's long-term investment value and would use its operating experience and industrial resources to help upgrade the business and improve its competitiveness. It said it has no plan to change Seagull's main business within 12 months.
Deal terms and financing
International Building Products, which held 28.27%, will sell 129,211,208 shares to PATEO for RMB 800m and 32,367,408 shares (5.01%) to Fuqing Yaohong, leaving it and concert parties with about 10.44%. PATEO will fund at least half of the price from its own funds and has committed not to inject related-party assets or pursue a reverse listing for 36 months.
Regulatory approvals and timing
The transfer requires PATEO shareholder approval and State Administration for Market Regulation merger review if needed, Shenzhen Stock Exchange compliance confirmation and registration with China Securities Depository and Clearing.
Market context
Seagull makes faucets and kitchen and bathroom components, mainly for export to Europe and the US. Its shares rose by the daily limit when trading resumed on 24 August.
