Ta Chen Stainless Pipe Co Ltd (大成不鏽鋼), a leading global supplier and mass distributor of stainless, aluminum and nickel alloy products, is to acquire Empire Resources Inc for US$58 million to expand the Taiwanese company’s presence in the US market.
“The merger and acquisition [M&A] deal is expected to enlarge the company’s operational scale, efficiency and competitiveness in the industry,” Ta Chen said in a filing with the Taiwan Stock Exchange on Saturday.
Ta Chen’s US subsidiary, Ta Chen International Inc, is the largest mass distributor of stainless metal products with a 30 percent market share in the US, while NASDAQ-listed Empire is the second-biggest, the Chinese-language Economic Daily News said, quoting Ta Chen officials.
The report said the deal could secure Ta Chen’s leadership position in the US market.
Currently, Ta Chen holds a 4.96 percent stake in Empire, the filing said.
The two companies have entered a definitive merger agreement that Ta Chen will invest US$7 per share, or approximately US$58 million, to acquire Empire, Empire said in a news release.
Empire said the US$7 per share price represents a premium of approximately 19.2 percent over Empire’s average closing price during the January-to-March period this year.
“We believe that customers of both companies will benefit from Empire’s services and Ta Chen’s Internet platform, delivery capabilities and extensive warehouse network in the US,” Empire president and chief executive officer Nathan Kahn said in the statement.
Kahn said Empire will operate as a wholly-owned subsidiary of Ta Chen, while its management team and reporting structure would remain unchanged this year.
Kahn and Empire vice president and chief financial officer Sandra Kahn, who together hold a 46.3 percent stake in the company, have agreed to tender their shares to the offer, the statement said.
The acquisition is expected to be completed on May 15, Ta Chen said.
Ta Chen on Friday last week reported net income of NT$485.74 million (US$16.01 million) for last year, a reversal from its net loss of NT$288.06 million recorded in the previous year.
Earnings per share were NT$0.61, compared with a loss of NT$0.36 per share in the previous year.
The company’s cash and cash equivalents stood at NT$3.35 billion as of Dec. 31 last year, its filings with the Taiwan Stock Exchange show.
Ta Chen’s board approved plans to distribute a NT$0.5 per share cash dividend and a stock dividend of NT$0.3 per share based on last year’s earnings.
The plans represent a cash payout ratio of 81.96 percent and a yield of 2.8 percent based on its closing price of NT$17.85 in Taipei trading last week.
Ta Chen shares have risen 1.42 percent since the beginning of the year, Taiwan Stock Exchange data show.
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