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On February 28, Hengli Co., Ltd. issued the "Notice of Hengli Petrochemical Co., Ltd. on signing the share purchase framework agreement of its subsidiaries." Hengli Chemical Fiber Co., Ltd., a subsidiary of the Company, intends to acquire the Zhejiang Gujudao Green Fiber Co., Ltd. (hereinafter referred to as "Green Fiber") held by Zhejiang Gujiandao New Material Co., Ltd. (hereinafter referred to as Guqildao New Material) ) 40% of the shares. The transaction price is tentatively set at 1.5 billion yuan. According to the announcement, the assets to be acquired by the Company include not only the target company's green fiber assets but also all the polyester-related businesses and assets of Gujian Avenue under its parent company Guqidao New Materials to be integrated into the green fibers. The core assets of the fiberglass polyester are mainly 1 million tons of aggregate production capacity, including 200,000 tons of civilian silk production capacity, 400,000 tons of chip production capacity and 400,000 tons of industrial yarn production capacity.
According to the statistics at the end of 2017, the current nominal production capacity of domestic industrial wires is 2.08 million tons and the effective production capacity is about 1.91 million tons. The concentration of the top 4 industries in the industry is as high as over 60%, of which 400,000 tons are for the ancient fiber road, 300,000 tons are for Youfu, 210,000 tons are for Haili, and 200,000 tons are for Hengli. This is a typical monopolistic competition pattern. After the completion of the acquisition of Furong Road, the acquisition of Furong Road by Hengli Co., Ltd. will bring the total industrial production capacity of 600,000 tons of industrial wire and a large proportion of shares to the public, nearly one-third of the effective capacity of domestic industrial wire and will completely change the competition in the domestic industrial wire market pattern. The company said the aim of the acquisition is to continue to consolidate its leading position in industrial polyester filament yarn, make full use of the marketing network and R & D capabilities of green fibers to fully enhance the Company's market position in differentiated polyester industrial yarn and rapidly seize the market
Hengli shares announcement also said that the acquisition is conducive to the two sides take the equity relationship as a link to business cooperation as the basis to strengthen the strategic cooperation between the two sides in the industry chain and strengthen their cooperation in the supply chain, procurement of raw materials, technology research and development, market Depth integration of the development and other aspects of the company is conducive to the company play "aromatics-PTA-polyester - civilian wire and industrial yarn," the whole industry chain integration platform for competitive advantage, to further consolidate and strengthen the company in polyester and industrial yarn business aspects of the competition Advantage and industry status.