LONDON (ShareCast) - (Sharecast News) - Plastics foam products company Essentra said on Thursday that it had purchased Chinese manufacturer Jiangxi Hengzhu Electrical Cabinet Lock Co for an initial consideration of ¥100.0m (£11.0m).

Essentra will take up a 73% stake in the Jiangxi Hengzhu via its Essentra Overseas subsidiary, while the remaining 27% stake will be subject to put and call options, with the group's ability to acquire the remaining minority shareholding to be determined by future operating performance and capped at a maximum upper limit of ¥37.5m (£4.0m).

The FTSE 250-listed group expects closing of the transaction, which it also highlighted would be funded from existing facilities, to take place in the third quarter of 2021.

Chief executive Paul Forman said: "This transaction strengthens our position in China, enabling us to expand our access hardware range. Hengzhu has excellent growth prospects and is a strong fit for the Components division.

"We have proven strong cross-selling opportunities for this product range in Europe and Hengzhu provides us with the ideal platform to further penetrate Asia. There is also scope to leverage our operations expertise to increase the efficiency of the business. This transaction is earnings accretive and will deliver sustainable value to Essentra over the long-term."

As of 0825 BST, Essentra shares were down 0.33% at 305.0p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE