China state-owned firm in $3.4 billion deal to buy military assets
SHANGHAI (Reuters) - Sichuan Chengfei Integration Technology Corp 002190.SZ, a Chinese state-owned maker of auto parts and batteries, said it plans a $3.4 billion private share placement to raise funds to buy three companies that make military aircraft.
Sichuan Chengfei's offer follows a push by the Beijing government to use capital markets to fund military expansion and float state-owned assets.
Sichuan Chengfei said over the weekend that it plans to raise 21 billion yuan ($3.37 billion) through the private placement. Most of the proceeds will be used to buy Shenyang Aircraft Industry Corp, Chengdu Aircraft Industry Corp and Hongdu Technology.
The transaction would "give military assets better access to capital and strengthen research and development of aviation products," Sichuan Chengfei said in a statement to the Shenzhen Stock Exchange.
Last September, China shipbuilding Industry Co Ltd (601989.SS) said it would raise about $1.4 billion to buy assets used to build warships, marking the first time that Beijing is tapping the stock market to fund the expansion of its military.
($1 = 6.2334 Chinese Yuan)
(Reporting by Samuel Shen and Kazunori Takada; Editing by Miral Fahmy)