DEAL: First foreign H-share mandatory general offer

Author: Brian Yap | Published: 7 Dec 2016

French manufacturer Vallourec successfully conducted the HKD846.6 ($109.16 million) acquisition of 50.61% of Hong Kong-listed Anhui Tianda Oil Pipe, Ltd via a mandatory general offer, the first time a foreign shareholder has taken up domestic shares in this manner.

This was made possible due to a relaxation of restrictions on foreign ownership of PRC steel manufacturers to more than 50%. However, because PRC law doesn’t provide for squeeze-out rights for minority shareholders, there was no guarantee that the French buyer would obtain all of the remaining shares of the H-share listed company, and get a delisting of the issuer following the mandatory general offer.

"There are quite often Chinese companies that buy other Chinese companies through this structure, but we were buying domestic shares with the foreign company becoming a domestic shareholder," said Emma de Ronde, partner at Norton Rose Fulbright in Hong Kong.

In order...