Singapore-listed shipbuilding and trading company AVIC International Maritime Holdings has entered into sale and purchase agreement to acquire logistics company Shanghai Catic Industrial for SGD45 million (USD33.3 million).
Currently, Shanghai Catic Industrial’s equity is held by AVIC Investment at 75% for the consideration of CNY155.3 million and AVIC International Hong Kong at 25% for the consideration of CNY51.8 million.
AVIC stated in its filing for the Singapore Exchange (SGX) that the main rationale for the proposed acquisition is to acquire and re-develop the land owned by Shanghai Catic Industrial, which will be used as AVIC Group’s headquarters and among other things, such as the proposed development plan.
Both the proposed acquisition and proposed development enable AVIC to consolidate its business operations and to meet its need for office space in the long term. The directors of AVIC believe that conducting the business operations at a centralised location in China will help to enhance efficiency.
Moreover, AVIC plans to establish its ship design capabilities in China. Thus, the proposed development plan is expected to house the group’s new research and development (R&D) efforts to strengthen its ship design capabilities in the country.
In the meantime, AVIC’s directors viewed that employing more Chinese local R&D staff will result in cost competitiveness in its ship design business sector in the long term. The company expects its R&D staff to be around 100 in China by the end of 2015 and the number to go up to 200 by the end of 2016.