Innovation – Calyon successfully completed the first partial take over bid in the PRC for a foreign company, the SEB electrical appliances group

The SEB group announced the success of its partial take over bid for the Chinese Supor company, giving it a 53% controlling interest in the target company. Calyon and its subsidiary CLSA participated in the initial negotiations between SEB and potential partners in the PRC and then carried out together this innovating transaction totalling EUR 327 million.

Supor is the leader in the PRC in small home appliances. This operation is a major step in the development of the SEB group, enabling it to step up its presence on the Chinese market through a recognized local brand, to develop its Asian operations and to take a foothold in new markets in the Western world from a competitive manufacturing base.

	Cyril Paolantoni, Worlwide manager in the Global Consumer Group within the Global Investment Banking Division, unveils for us the keys to this success

You coordinated the arrangement of this operation in liaison with Frank Bervillé, senior Banker of the SEB group and William Yeung, managing director with CLSA. In what way is transaction innovating?

It is the first successful partial take over bid targeting a Chinese company. We have used a very novel concept enabling to satisfy the Chinese Government's requirements aimed at avoiding Chinese companies delisting from the stock exchange.

This success paves the way for many investment opportunities for foreign companies on the Chinese market.

This transaction is innovative in that it is complex for the Chinese market. It was performed in three phases. Initially, the SEB group acquired a 14% interest from the family group which controls Supor, with the other shares being protected under the Chinese regulations. To reach the percentage for launching a partial take over bid as authorized since 2006, SEB had to hold 30% of the Company's capital. So, in a second phase, we arranged a rights issue reserved for SEB. With a 30% stake, SEB could go ahead with the third and last phase, a partial take over bid which was a real success, with subscriptions for 66 million shares largely exceeding the limit of 49 million shares on offer.

What were Calyon's assets in this transaction?

First of all, we have been successful because of our presence in Asia through our CLSA subsidiary which lines up an investment banking team of 35 specialists. Not only does CLSA have an intimate knowledge of the Chinese market and of local corporates but it also holds a licence which enables it to operate on the stock market. Lastly its past track record is there to show its professionalism in the assistance of European customers in the PRC.

Then, we assisted the teams of our client both in France and in the PRC. The execution work was performed in France with close cooperation with SEB. It particularly involved adapting CLSA's recommendations to our client's standards. We are familiar with the client and with its industry, consumer goods. CLSA contributed its know how of the local market. The success is due to Calyon's – CLSA's joint efforts.

What are the competencies necessary to be successful on this market?

You must entertain good relations with three unescapable administrations viz the Ministry of Commerce to obtain the authorization for a foreign group to invest in the PRC, the Shenzhen Stock exchange for the performance of the take over bid and the CSRC (Chinese Securities Regulatory Commission) equivalent to the SEC. It is also necessary to know well the local investment funds which hold shares in the Chinese industrial groups.