(Reuters) - The listed arm of China's Xinmao Group confirmed on Wednesday that its parent aims to acquire Dutch cable maker Draka, but added that the $1.3 billion offer remains uncertain and pending Beijing's approval.
While the statement by Tianjin Xinmao Science & Technology was the first public acknowledgement that it is in the process of thwarting an existing offer for Draka by Italy's Prysmian, the release did little to add certainty that Xinmao was in pole position to win the deal.
Tianjin Xinmao Group will offer 20.5 euros per share, or about 1 billion euros ($1.34 billion), the listed unit said in a stock exchange filing. But the same statement says the offer totals more than 5 billion yuan ($753 million), without explaining the discrepancy.
Xinmao said the two sides were "in detailed discussions about the deal" but still needed Chinese government approval.
"Whether the deal will go through is still uncertain," Xinmao said.
Xinmao said on Wednesday that the group has sent the offer to Draka's management board and supervisory committee. Draka executives have said they only have a press release from the company, and no formal offer.
Interest from the largely unknown Xinmao prompted skepticism over whether it could manage such a takeover. The bulk of the all-cash bid would likely have little to do with Xinmao's listed entity, which earned 51.4 million yuan last year and has a market cap one-third the size of the Draka offer.
"The capacity of optic fiber in China doubled in the past year and I can't see any major benefits for buying a foreign fiber cable maker," a Shenzhen-based telecommunications industry analyst said. "It may be like Tengzhong wanting to buy Hummer -- a purely marketing act," he said, referring to the attempt by China's heavy equipment manufacturer to acquire the SUV brand from General Motors.
Late on Tuesday, Draka said it would begin takeover talks with Xinmao, even as it described a previous offer from Italy's Prysmian as a sensible all-European combination.
Shares in Draka closed at 19.27 euros on Tuesday, while Xinmao Science & Technology shares were little changed, having earlier hit their highest since August 2009.
Prysmian's cash and share offer valued Draka's equity at just over 800 million euros.
The Xinmao group does business in a variety of fields including optical fibers and communications, property development, wind turbine blades and hotel services.
Calls to the company, based in Tianjin, went unanswered Wednesday.
Xinmao's statement pointed to the benefits of combining forces with Draka.
"The two companies have definite synergies in the optical communication industry," Xinmao said. "If we are successful in acquiring Draka, we will be able to use their core technologies in fiber optics products to develop the Chinese market."
Many listed companies in China have privately held parents whose finances and strategy are opaque. Often it will be the parent company that handles major acquisitions, as was the case when the unlisted parent of Geely Auto launched a successful bid for Ford Motor's Volvo unit.
The announcement sent bankers and investors scrambling to find more information about privately owned Xinmao Group, which media reports said was formed by Du Kerong, a former senior officer in the Chinese airforce.
The global cable market, estimated by market research firm CRU to reach $176 billion in 2011, is highly fragmented and seen as ripe for consolidation.
