Sany Heavy Industry Co. is to issue shares totaling 1.98 billion yuan (US$289.7 million) in a private placement to acquire its parent's excavator machinery business.

The Chinese machinery maker said in a statement to Shanghai Stock Exchange yesterday that it would float 117,857,142 shares to 10 individuals in exchange for the control of Sany Heavy Machinery Investment Ltd, which owns its parent's excavator business.

Shares will be 16.80 yuan each, the average price of the previous 20 trading days plus a 14.1-percent premium.

The business and assets will be fully controlled by Sany Industry after the transaction.

The design, production and sales of excavators is the core business of Sany Industry. Sales of excavator machinery by Sany Industry in the first nine months of this year totaled 2,405, more than double in the same period last year and accounted for 3.4 percent of the total number of machines sold, the highest in the domestic market.

"The new shares are fairly priced, and we're quite positive of its expanding in the coming years concerning its leading position in the domestic market," a research report by Guosen Securities said.

Sany Industry's third-quarter profits totaled 1.08 billion yuan (US$1.58 billion), down 14.9 percent on the same period last year.

Its shares surged 6.29 percent to close at 12 yuan in Shanghai trading yesterday.

The deal is subject to shareholder and regulatory approvals, the company said yesterday.

(Shanghai Daily November 6, 2008)