Mainboard-listed CEFC International Limited (CEFC International or the company), has announced that with the completion of acquisition of 100% equity interest in CEFC Assets Management & Equity Investment (Hong Kong) Co., Limited (the target) from CEFC Shanghai Group Assets Management Co., Ltd (the seller) on 24 December 2016 (all inclusive, the proposed acquisition), the company has made the significant first step in its major expansion into Europe's market. Prior to this, the company has also obtained the approval by the French Ministry of Economy on 15 December 2016 and antitrust clearance by European Commission on 23 December 2016.
The target owns 51% interest in Rompetrol France SAS (Rompetrol France), which is the holding company of Dyneff SAS (Dyneff), one of the leading independent fuel distributors in France, with business operations in both France and Spain. Dyneff has been active in the fuel distribution sector for more than 50 years covering three distribution channels: filling stations, a network of commercial agencies and two wholesale agencies. Dyneff also has established logistics infrastructure in both France and Spain, with strategic storage capabilities at the main Mediterranean and Atlantic ports.
The purchase consideration of US$20.5 million will be satisfied in cash in two installments and is agreed upon after arm's length negotiations between the purchase and the seller and has taken into consideration an independent valuation of the target and its previous transaction value. Based on the financial statements of Rompetrol France for FY15 provided by the seller, Rompetrol France recorded a net profit after tax of approximately US$2.9 million as at 31 December 2015. Following the completion of the acquisition of 51% stake in Rompetrol France by the target in 2016, the target recorded a net profit after tax and minority interests of approximately US$3.3 million for the six months ended 30 June 2016.
The company has prioritised Europe as its key strategic market given the size of its energy market and tremendous consumption energy demand, established financial markets, developed legal framework and its low cost financing environment. Dyneff's existing oil and gas distribution network, logistics and storage facilities in Europe provide a stepping stone for the Company's entry into the European market and is expected to facilitate the shift of related trading activities focus onto the platform in Europe. At the same time, Dyneff's existing relationships with local banks and regional oil and gas players will also be beneficial for the company in capitalising on the low funding cost and identifying investment opportunities to build up an investment and financing platform in Europe.
On the other hand, CEFC International is a company listed on the mainboard of SGX-ST, and has high standards of corporate governance, access to capital markets, established banking relationships and business network in Asia. The company and Dyneff are therefore able to complement each other and grow from strength to strength.
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