What’s new: Jiangsu Shagang Group Co. Ltd. sued Fosun International Ltd. alleging breach of contract in its deal to acquire Fosun’s steelmaking assets after a rival bidder preempted the transaction.
In a civil lawsuit filed with the Jiangsu Provincial Higher People’s Court, Shagang demands that Fosun honor the original agreement, Fosun said Thursday night in a statement.
Fosun said it would respond to the lawsuit based on relevant facts, agreements and laws to protect the company's legitimate rights and interests and maintain the certainty of the deal. Fosun said the lawsuit will not affect the normal operations of the group but did not specify whether the lawsuit would affect its deal with the rival bidder.
The background: Shagang, China’s largest privately owned steelmaker, signed a formal agreement last month to buy a 60% stake in Nanjing Nangang Iron & Steel United Co. Ltd. for 13.58 billion yuan ($1.97 billion) from Fosun. Shagang already paid Fosun 8 billion yuan of earnest money after it signed an initial framework agreement with Fosun in October.
But Nangang’s other parent company, Nanjing Steel Group, has a preemptive right to buy the shares before the opportunity is offered to others. Earlier this month, a unit of state-owned heavyweight Citic Ltd. partnered with Nanjing Steel Group to exercise Nanjing Steel’s right to buy the Nangang stake for the same price.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
Get our weekly free Must-Read newsletter.
