Pan-United to acquire 90% equity interest in Changshiu Changjiang International Port

To the tune of roughly S$91.3m.

The Board of Directors of Pan-United Corporation Ltd (Pan-United) announced that its subsidiary, Changshu Xinghua Port Co., Ltd (CXP), has on 18 February 2014 entered into an agreement with Changshu Binjiang Urban Construction Investment & Management Co., Ltd (CBUC) to acquire 90% of the equity interest held by CBUC in Changshu Changjiang International Port Co., Ltd (CCIP).

CBUC had put the sale equity for sale through an open-tender bidding process and CXP had won the tender. Subsequent to winning the tender, CXP and CBUC entered into the agreement.

Pursuant to the agreement, CBUC will transfer to CXP, and CXP will acquire, the sale equity for an aggregate sum of RMB436.5 million (approximately S$91.3 million).

Explaining the reasons behind the proposed acquisition, the company said that as part of its growth plans, the Group has been exploring avenues to tap strategic opportunities to grow its core businesses. The proposed acquisition is in line with the group's objective of expanding its port and logistics businesses.

CXP operates the multi-purpose cargo port located within a high growth industrial zone along the Yangtze River, 90 kilometres west of Shanghai. CCIP, which is located just adjacent to CXP, operates a break bulk cargo port similar to CXP but smaller in design throughput and size. As the operations of CCIP and CXP are complementary and the ports are located next to each other, the Company is of the opinion that CCIP will provide commercial and operational synergies with the current operations of CXP.

The company expects that if the operations of both port facilities are integrated, economies of scale can be achieved and this would lead to value-added expansion and the optimising of its operations in Changshu over time. In this connection, the integration of the two (2) ports would also result in the diversification, expansion and stability of the cargo base of both ports as CXP is in a position to optimise its port facilities by focusing on larger ships whilst CCIP's port facilities are more suited for smaller ships and domestic cargoes.