Fushi Copperweld CEO and Abax Global Capital offer $434 million to take company private

Nov 3, 2010 9:57 AM  from Seeking Alpha

Copper-clad bimetallic conductor products manufacturer Fushi Copperweld (NASDAQ:FSIN) looks set to go private after the company’s CEO and Chairman and Abax Global Capital announced an offer to acquire the company for US$11.50 per share in cash.  Shares in the company closed yesterday at US$9.10 per share.  The offer values Fushi Copperweld at approximately US$434 million.

Mr. Li Fu, CEO and Chairman, Abax Global Capital and their affiliates already control 29.2% of the company’s stock, and plan to create a new acquisition vehicle that will fund the acquisition of Fushi Copperweld through a combination of debt and equity capital.

The Nasdaq listed, China focused manufacturer has formed a special committee to consider the offer.

Yesterday the company posted a 40% rise in its third quarter profits, helped by strong copper prices and a rise in sales volumes from its US facility.

For the third quarter, net income was $12.9 million, or $0.34 per diluted share, compared with profits of $9.2 million, or $0.31 per diluted share, in the prior year quarter. These results include expenses of $176,000, as well as net interest income of $154,274.

Adjusted for one-time items, net income was 13 million in the period, or $0.34 per diluted share, up from $7.6 million, or $0.26 per diluted share, in the third quarter of 2009.

Revenues increased 39.5% to $66.5 million, reflecting organic growth on account of copper prices, as well as a 32% increase in sales volumes from the company's US facility, which offset a slight decline in sales volumes within China.

By quarter-end, the company's cash position stood at $117.9 million.  Long-term debt totaled $5.9 million, compared to $32.7 million at December 31, 2009.

The company expects adjusted fully diluted earnings per share to be between $0.29 and $0.31 for the fourth quarter, and between $1.25 and $1.29 for the full-year.