Chinese set to takeover Kresta
UPDATE 11.15am: Shares in Kresta Holdings shot higher after its controlling Chinese textiles maker launched a $27 million takeover bid for the window furnishings company.
Ningbo Xianfeng New Materials, which trades under the brand name APLUS, told the ASX today it would bid for the remaining 80 per cent of the Malaga-based company.
The Chinese bidder's founder and chairman Xianfeng Lu runs Kresta. The company has priced the offer at 23c a share.
Kresta shares shot up four cents, or 24.24 per cent, to 20.5 cents at 11.15am on news of the offer.
Kresta said in a statement this morning that its board was yet to fully consider the proposed offer and it advised shareholders to take no action and await the company’s further response.
The company is the biggest manufacturer of blinds and curtains in Australia and New Zealand. Including retail operations, Kresta has about 700 employees.
If successful, the takeover would raise fears of manufacturing being sent offshore. While it is a well-known brand with more than 40 years in the market, Kresta has struggled to stay profitable.
Control of the company has repeatedly changed hands over the decades. Its recent history has seen tensions between shareholders with conflicting commercial interests, causing frequent turnovers of boards and management.
When Mr Lu took over the business in March, Kresta independent chairman Richard Taylor said he did not believe there was a threat to the Malaga factory.
The proposed deal via a subsidiary would require approval from Ningbo Xianfeng's shareholders. The RMB1.52 billion ($260 million) company's stock rose 10 per cent in response to the news.
The Chinese company had telegraphed its intentions by building up a stake to reach the 20 per cent takeover threshold.
It first bought into Kresta last December at 23c a share. An individual shareholder from the city of Ningbo, Xiaoyang Lu, also acquired 20 per cent that month.
The Chinese investment came through a deal in which fund manager Hunter Hall and Taiwanese manufacturer Si Chuan Cheou exited long-held stakes in the company.
A successful bid by Ningbo Xianfeng would require the consent of Queensland manufacturer Fiesta Design, Kresta's other major shareholder.
Fiesta's representative on the board, Robert Farrar, quit as a director on Friday. Three months earlier, he had been appointed to an executive role running Kresta's east coast operations.
Kresta executives Sean Shwe and Andrew Tacey, a former chief executive of Kresta, were appointed to the board. Mr Shwe was also appointed chief operating officer.
