China XD Plastics Goes Private; Shares Jump 12%

Author: Binwei Wang   

China XD Plastics Co. Ltd. (Nasdaq: CXDC) announced Monday that it has agreed to a buyout deal and a merger with Faith Dawn Ltd. and Faith Horizon Inc., sending its shares up more than 12%.

The chemical company said that under the agreement, Faith Dawn will acquire all the outstanding shares of China XD Plastics for a cash consideration equal to $1.20 per share.

China XD Plastics reported the merger is expected to close during the third quarter of 2020 and is subject to various closing conditions, including the adoption of the Merger Agreement by the company's stockholders. The board of directors, acting on the recommendation of a special committee of independent and disinterested directors, unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement.

Hogan Lovells is serving as U.S. legal counsel to the Special Committee; Duff & Phelps, LLC is serving as the financial advisor to the Special Committee.

Earlier this month, the Harbin-based chemical company reported an increase of 14% in revenue in full-year 2019 from $1.27 billion to $1.45 billion while the company got a net income of $3.1 million, down 96% year-over-year in 2019.

Looking ahead, China XD Plastics said the 30% decrease in the China auto industry during the first four months will impact the company through the supply chain, though it did not provide any specific guidance. 

Shares in China XD Plastics were trading at $1.20 per share, up 12% by midday.