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Shares of China's Hengan get bump from acquisition plan

Sanitary products maker to buy Malaysian rival Wang-Zheng

HONG KONG -- Shares of China's Hengan International Group were up in Tuesday trading here as investors favorably reacted to an acquisition plan announced the previous afternoon.

Shares of the Chinese maker of disposable diapers and other sanitary goods at one point rose 0.80 Hong Kong dollars, or 1.46%, from the previous day's close, to HK$55.50. 

After trading closed on Monday, Hengan revealed a plan to acquire 50.45% of Wang-Zheng, a Malaysian rival.

Investors are hopeful that the plan will bring growth.

According to the announcement, Hengan will acquire 80 million shares through its Malaysian subsidiary for about 91 million ringgit ($21.4 million). Wang-Zheng will continue to trade on the Malaysian market.

The Chinese company said the acquisition deal "is [being] undertaken as part of [a] plan to expand business operations and diversify revenue streams outside the People's Republic of China."

Andes S.C. Lau of Prudential Brokerage in Hong Kong, however, said any positive impact from the acquisition seems limited at this point. Hengan, Lau pointed out, has yet to detail how it might maximize any synergies with Wang-Zheng.

Established in 1965 as a small factory operation, Wang-Zheng makes sanitary napkins and facial tissues. Tuesday morning on the Malaysia market, Wang-Zheng shares rose sharply, at one point hitting 1.350 ringgit, up 18.42% from the previous day's close and renewing a year-to-date high reached about a month ago.

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