China’s Yong Jie Soars by Limit After Unveiling Plan to Buy Arconic’s China Assets

(Yicai) Jan. 26 -- Shares of Yong Jie New Material surged by their daily trading limit after the Chinese maker of aluminum alloy products said it plans to acquire the China-based assets of US industrial giant Arconic.Yong Jie [SHA: 603271] closed 10 percent up at CNY47.14 (USD6.77) per share in Shanghai today, giving it a market capitalization of CNY9.3 billion (USD1.3 billion).Yong Jie will acquire all of Arconic’s plant in Qinhuangdao and 95 percent of its factory in Kunshan for no less than USD180 million, the Hangzhou-based company announced yesterday. Arconic will retain a 5 percent stake in the Kunshan facility.The deal could cost more than USD242 million, Yong Jie said, reflecting its assumption of about USD16 million in seller loans and interest owed by the target assets, an estimated USD46.2 million transitional revenue-sharing payment tied to Ford Motor contracts, and other contingent factors.The two plants have been operating for more than 20 years and were originally Alcoa’s core aluminum manufacturing bases, but became subsidiaries of Arconic following Alcoa’s spin-off in 2016.The Qinhuangdao plant mainly produces aluminum can bodies and lithium-battery materials, alongside vehicle body panels and other aluminum sheets for commercial transport and industrial uses, with some output capacity for specialty products such as aluminum sheets for liquefied natural gas vessels. The Kunshan plant turns out high-end heat-management brazing materials for the auto and other industrial markets.The deal will fill capacity gaps in aluminium can bodies, lithium-battery materials, and high-end heat-management brazing materials, materially lifting Yong Jie’s standing across those product markets. the company said.It will also broaden and improve the firm’s customer relationships, swell the share of high-end products in its revenue mix, and raise processing margins and profitability, Yong Jie added.In a separate statement yesterday, Yong Jie said it had signed a pact with Arconic under which the parties pledge to build a resilient, efficient, and customer-centric global supply-chain and capacity coordination system, and to give each other priority consideration for inclusion in their respective global supply chains on equal terms.The pair also intends to jointly pursue forward-looking research and development addressing future aluminium demand, and to co-develop new high-performance aluminium alloys and production technologies targeted at strategic sectors, including new energy, advanced equipment, artificial intelligence, and robotics, Yong Jie said.Editor: Futura Costaglione