Ed Frackowiak, Chairman and CEO of Wescast Industries Inc. left, and Dong Ping, Chairman and CEO of Sichuan Bohong Industry Co., right, pose for a photo in Toronto, Ont. Monday, September 12, 2011.Brett Gundlock
Wescast Industries Inc. says it hasn't received a required $2-million deposit from Sichuan Bohong Industry Co., Ltd., the China-based company that's negotiating a friendly takeover of the Canadian auto parts manufacturer.
Wescast said Tuesday it has neither terminated the agreement nor waived its right to do so.
The Canadian company, based in Brantford, Ont., agreed early this month to a proposed offer of $13.60 per share from Sichuan Bohong. With about 13.2 million Class A and B shares outstanding, the deal valued the Wescast at $180 million.
The A shares closed Monday at $11.05, suggesting there was doubt in the market that the takeover will come to fruition even before Wescast's announcement about the missed deadline.
Investors took Tuesday's announcement in stride, with only four trades totalling 1,000 shares exchanged in the first 20 minutes of the session. The stock dropped 30 cents to $10.75, a decline of about 2.7 per cent from the previous close.
Under the memorandum of understanding, Bohong has an exclusivity period that lasts under Dec. 30 to negotiate a final deal to acquire Wescast.
Bohong was to pay the $2-million deposit by Sept. 19 as a sign of good faith, while it pursues financing from the China Development Bank.
The transaction still needs to meet a number of closing conditions, including approval from Wescast shareholders, the Ontario Superior Court and regulators.
Wescast is controlled by the family of former company chairman Richard Levan through multiple voting class B shares, which aren't traded publicly.