Huaneng shows the power of WTO

A Chinese power acquisition using an international valuation model shows that Beijing is serious about reform.

The recent acquisition of Shandong Huaneng Power SHP by Huaneng Power International HPI shows the China really is gearing up for membership of the World Trade Organization WTO. The deal ├╗announced on Tuesday ├╗ will see HPI pay a one-time cash payment of Rmb1.34 for each SHP share or $8.09 per American depositary share. This represents a 92.9% premium over the average price of SHP's shares over the previous four weeks. The total amount of the deal is Rmb5.8 billion $699 million, which will be funded by HPI's internal cash reserves and cash flows generated this year. HPI might also raise some additional local currency loans from Chinese banks.

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