China's Evergreen Industries to buy MagIndustries

Wed Apr 20, 2011 2:48pm EDT
 
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(Reuters) - MagIndustries Corp MAA.TO plans to sell itself to China's Evergreen Industries Group for C$115 million ($120.3 million), capping the Canadian company's attempts seeking capital to develop its key potash project in Congo.

Companies have been scouting for potash deposits as a rising

population spurs demand for fertilizers, despite limited feasible deposits and high development costs.

The deal with Evergreen could put an end to MagIndustries' strategic alternative process that began last year. But the deal still requires Chinese government approval, which has generally been hard to come by.

Regulatory hurdles in China had stalled MagIndustries' partnership talks with China National Complete Plant Import and Export (Complant) (000151.SZ: Quote) to develop its 1.2 million tonne-a-year Mengo project in Congo.

In February, Taiwan-based TSC Capital also pulled out of a deal to buy a 55 percent stake in MagIndustries for C$185 million, which would have satisfied the equity component needed to build the Mengo project.

Shanghai-based Evergreen, involved in ship building, marine engineering, natural resources and logistics, will acquire all of MagIndustries' shares for 25 Canadian cents a share, which is a 67 percent premium to the stock's Tuesday closing price.

Evergreen has over 25,000 workers, according to its website.

MagIndustries shares soared 57 percent in early trade on Wednesday. They were trading up 50 percent at 22.5 Canadian cents, below the offer price -- a sign generally seen favorable to a deal.   Continued...