Ham-Let buys Chinese valve co for $15m

Ishay Davidi
Ishay Davidi

Jiangshu Xinghe Valve's business is similar to Ham-Let's core business.

Ham-Let (Israel-Canada) Ltd. (TASE: HAML), which develops, manufactures, markets, and sells industrial and high tech compression fittings and valves, is making its largest ever acquisition.

The company today reported that it had signed an agreement to buy 100% of the shares of Jiangsu Xinghe Valve, a connectors and valves company located in Jiangsu Province in China, for $15 million. An additional $3.35 million will be paid to the sellers, depending on the company's performance in the coming years.

Ham-Let, controlled by FIMI Opportunity Funds and managed by CEO Amir Widmann, said that completion of the deal was contingent on the fulfillment of various conditions, such as approval by the authorities in China and the signing of marketing, sales, and partnership agreements. Ham-Let believes that these agreements will be completed by April 30. Ham-Let's management plans to use its lines of credit to pay for the deal.

The Chinese company, which has 222 employees, produces and markets a wide variety of valves and connectors for Chinese companies dealing in nuclear energy; railways; the petrochemical, oil, and gas industry; and other control processes through long-term contracts.

The Chinese company reported $19 million in revenue in 2014, with an EBITDA of $3 million and a $1.6 million net profit. Jiangsu Xinghe is a subsidiary of the Xinghe group.

Ham-Let stated that Jiangshu Xinghe Valve's business was similar to Ham-Let's core business. Ham-Let management believes that the two companies' similar capabilities will enable Ham-Let to expand its foothold in Asian markets and strengthen its global competitive status through optimization of production capacity.

Widmann said, "The acquisition will expand our global business and our production capacity to China and other markets in Asia and the entire world. Jiangshu Xinghe Valve has a proven record of unique capabilities in the production of valves and connectors for the nuclear energy industry. The acquisition will enable us to penetrate other developing industries in China, such as solar energy and the rapidly growing semiconductor industry, using the Chinese company's production platform."

Ham-Let's market cap is NIS 393 million. The company share price has fallen from NIS 39 in March 2015 to NIS 28.2 million at present.

Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Ishay Davidi
Ishay Davidi
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