A Jan. 30 meeting of shareholders in a Melbourne-based manufacturer of biodegradable plastic resins, Biograde Ltd., is likely to determine the fate of a takeover bid by diversified industrial group Cardia Technologies Ltd.
Cardia, also headquartered in Melbourne, launched its acquisition bid late last year by offering two of its shares and two options for each Biograde share. The offer values Biograde at more than US$4.7 million.
Biograde, established in 2003, manufactures biodegradable resins from cornstarch and hybrid resins using cornstarch-based products blended with polyesters. The resins can be used to make molded, thermoformed, foam and blown film products similar to those produced using traditional polyethylene.
Subsidiary firm Biograde (Nanjing) Pty. Ltd. operates a manufacturing plant in Nanjing, China. Those products are marketed globally through another subsidiary, Biograde (Hong Kong) Pty. Ltd. The Nanjing plant produces about 7.3 million pounds of resin a year.
Cardia operates subsidiary companies across five business units, covering medical biotechnology, environmental services, agricultural biotechnology, natural medicines and mineral exploration.
Biograde Managing Director Frank Glatz said the deal was an opportunity for the company to continue growing.
``It's all about growth,'' he said by telephone from Nanjing. ``We are winning new markets and experiencing significant growth, and to continue that growth, we need the funding that Cardia can provide.''
A Biograde spokesman said the company has achieved considerable success with its biodegradable resins and had most notably secured a contract to supply biodegradable plastic packaging for use at the 2008 Beijing Olympics.
``The [Beijing authorities] set unprecedented standards of biodegradability. They were very, very high,'' he said. ``There just weren't a lot of other companies that could meet the standards.''
The spokesman said Cardia's exact intentions for Biograde are expected to be detailed at the Jan. 30 shareholders' meeting.
Information released to the Australian Securities Exchange (ASX) said Cardia directors expect that, if the acquisition goes ahead, Biograde will continue to operate as it does now, but a review will examine potential synergies, especially in administrative staffing levels.
The ASX announcement also said the deal is subject to regulatory approvals, including endorsement by the state Supreme Court of Victoria, which means any acquisition is unlikely to be finalized until at least February.