Pilkington to corner 40pc of China Glass IPO shares

As the third-largest shareholder in the mainland glassmaker, London-listed Pilkington will pay between HK$54 million and HK$83 million in cash with the right to boost its stake in China Glass and become its second largest shareholder in 12-18 months, market sources said.China Glass aims to raise up to HK$207 million by selling 90 million new shares, representing 25 percent of its enlarged share capital.The Jiangsu-based private enterprise initially set the price range between HK$1.50 and HK$2.3 each, valuing it at about eight to 13 times 2004 earnings, sources said.

By comparison, Hong Kong-listed glassmaker Zhejiang Glass' price-to-earnings multiple was six times last year's earnings while multiples of both Xinyi Glass and Luoyang Glass were 10 times.

Founded in 1826, Pilkington is one of the world's largest makers of glass and glazing products for building and automobiles. It controls 14 percent of the world's float glass production capacity, with annual turnover of 2.4 billion (HK$34.19 billion).

``The share purchase by a foreign strategic investor would help to ensure the successful launch of China Glass share sale at a time when the Hong Kong IPO market is crowded,'' a Hong Kong-based fund manager said.

China Glass is launching its share sale at about the same time as several mega-IPOs such as China Shenhua Energy, which is raising HK$23 billion, and Bank of Communications, which seeks up to HK$14.9 billion.

China Glass' second-largest shareholder is Legend Holdings, a sister company of China's largest computer maker Lenovo Group. Legend's stake in the glassmaker will be diluted to about 25 percent from 33 percent after the listing. China Glass will hold an investor presentation for its share sale tomorrow, and is expected to debut on the mainboard June 23.

The company now runs two float glass production lines with annual production capacity of 329,000 tonnes and specializes in production of automobile and construction grade glass. Its annual production capacity is expected to rise to 548,000 tonnes by the fourth quarter this year after the construction of a third production line is completed.