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YUNFU, CHINA -- China's largest plastics pipe maker, China Liansu Group Holdings Ltd., is spending 116 million Chinese yuan ($18.4 million) to buy a valve manufacturing and epoxy coating factory owned by the company's chairman, Wong Luen Hei.
Liansu said in a Jan. 15 filing to the Hong Kong Stock Exchange that it is buying the factory, in Yunfu, to help it expand its own capacity and meet increasing demand in the country's municipal pipe and residential construction markets.
In August, the company disclosed plans to add four more pipe-making factories in China, a significant expansion of its capacity.
The Yunfu factory, which is wholly owned by Wong, has more than 100 employees and makes about 800,000 sets of valves a year, including PVC and polyethylene soft seal gate valves, rubber check valves and hard seal epoxy coated valves, Liansu said in the filing.
The factory operates under the name Guangdong Liansu Value Co. Ltd. and was set up in 2006 with an investment of HK$100 million (US$12.9 million), the company said.
Liansu said in the stock filing that the terms of the sale were deemed fair following a review by an outside financial advisor, Investec Capital Asia Limited, and appraisals by an appraisal firm.
The company said Wong and two other executive directors on the Liansu board abstained from voting on the acquisition. They are Wong's wife and Liansu's CEO Zuo Manlun, who is Wong's brother-in-law.