China's largest building materials manufacturer, China National Building Material Group (CNBM), agreed to take control of Luoyang Glass Co, one of China's largest glass makers.
According to a statement to the Hong Kong exchange, Luoyang State-owned Assets Operation Co will transfer 70 per cent of Luoyang Float Glass (Group) Co to CNBM.
Luoyang Float Glass has a 35.8 per cent stake of Luoyang Glass and is its largest shareholder, said the statement.
"CNBM will inject 40 million yuan (US$5.13 million) of capital into a subsidiary of Luoyang Glass, and guarantee loans for Luoyang Glass of up to 250 million yuan (US$32.05 million)," said the statement.
This March, CNBM made its initial public offering (IPO) on the Hong Kong Stock Exchange, which raised up to US$231 million to fund its expansion.
The Beijing-based company has controlling stakes in Beijing New Building Material Co, a mainland-listed company. It is the largest manufacturer of gypsum board, a kind of building material in China.
Another mainland-listed company under its control, China Fiberglass Co, has become one of the four biggest fibreglass suppliers in the US market.
Analysts said that the nation's glass industry will see more consolidation in coming years, with some low efficiency and small players knocked out.
Last month the US investment bank Goldman Sachs offered to buy a 9.98 per cent stake in China's biggest auto glass maker, Fuyao Glass Industry Group Co, for 890 million yuan (US$113 million).
The deal will help Fuyao reduce its financial expenses, said Zhang Xin, an analyst with Guotai Jun'an Securities. "As the leader in China's auto glass market, the company is important in the international auto glass market," he said.
Earlier this February, China Glass Holdings Ltd agreed to pay 416 million yuan (US$53 million) to buy controlling stakes of seven rival domestic glass makers, making it the largest listed flat glass producer in the nation.
After the acquisitions, the daily melting capacity of China Glass will more than triple to 4,780 tons from 1,500 tons. It will operate 14 production lines after the acquisitions, up from the current three.
China Glass said the acquisitions will help it explore more overseas marketplaces.
China's glass industry witnessed a slowdown last year, with the profit margin for glass makers dropping due to a surge in costs and decreases in prices.
Last year the nation's flat glass output was 175 million tons, up 15 per cent from a year before. The growth rate in 2004 was 20 per cent.
Source: China Daily