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A&W Woods buys Baosteel company

By Jin Jing (China Daily)
Updated: 2007-03-31 09:31

A&W (Shanghai) Woods Co Ltd, China's largest solid wood flooring manufacturer, announced on Friday it had acquired the laminate floor brand Baounite fromBaosteelGroup for 15 million yuan at the Shanghai United Assets and Equity Exchange.

This is A&W's, formerly known as Shanghai Anxin Flooring Co Ltd, firstacquisitionfollowing a 230 million yuan investment from The Carlyle Group in May last year.

"It is the first step in our business expansion, especially in the laminate floor sector," said Lu Weiguang, president of A&W.

The acquisition includes allfixed assets, brand, productpatentand the distribution network of Baounite. Already the owner five flooring brands, A&W will have a comprehensive product range following this acquisition.

A&W posted sales of 900 million yuan in 2006, topping all other wood-flooring producers in China.

The production capacity of Baounite amounts to 2 million square meters annually.

"Baosteel Group sold the brand in accordance with our target of non-core businesses from steel production," said Cheng Zhidao, general manager from Shanghai Baobusiness Co Ltd, a wholly owned subsidiary of Baosteel Group.

According to Lu, A&W plans to build two production bases in Shanghai in the next three years. In addition, the company is expected to establish a wood floor export center in Brazil before 2010.

"We currently have no plan to obtain a listing on the stock market," said Lu at Friday's news conference to announce the acquisition.

However, two month ago, Lu reportedly said there was a plan for a listing on theHong Kongstock exchange at the end of 2007

"This is was our old plan," Lu told China Daily after Friday's news conference.

The exports of China wood and wood products amounted to $14.5 billion in 2006, up 41 percent from 2005. The exports were 1.2 times that of imports.

"China has become a big wood exporter," said Zhu Guangqian, head of China Timber Distribution Association at Friday's news conference.

China has more than 2,000 small-scale wood floor manufactures, who have little risk prevention capability, according to Zhu. "The rising cost of raw materials add to the risks of many small manufactures," he said.

"Wood products manufacturers in China should try to establish their own brand names, enhance technology research capability, have more patent products and accumulate more resources," Zhu said.