(Yicai) Feb. 20 -- Chinese regulators have approved China Baowu Steel Group to acquire CPMC Holdings, the country’s second-largest metal packagings firm, ending an attempt by ORG Technology to take over its smaller rival.

The State-owned Assets Supervision and Administration Commission has given the go-ahead for the acquisition, Hangzhou-based CPMC announced yesterday. 

CPMC said early last December that Champion Holding, an affiliate of Baowu, would buy all of its shares for HKD6.87 (88 US cents) apiece or up to HKD7.65 billion (USD978 million) in total. Industry leader ORG then also made a tender offer, but did not follow through with a binding agreement.

Minsheng Securities expects Shanghai-based Baowu to integrate CPMC and its unit Baosteel Packaging. Rat-race competition in the metal canning industry may now ease and profitability increase, the brokerage added.

In the first nine months of last year, revenue at Baosteel Packaging fell 6 percent to CNY5.8 billion on a 4 percent drop in net profit to CNY202 million. ORG had CNY10.7 billion in revenue, down 1 percent, and CNY706 million in net profit, a 30 percent jump. 

Shares of Baosteel Packaging [SHA: 601968] surged by their 10 percent daily trading limit in Shanghai today to close at CNY4.90 (US 70 cents) each.

Formed in 2007, CPMC went public in 2009. It makes tinplate, aluminum, and plastic packaging for food, drinks, and personal care products. As of last June, state-owned food processing giant Cofco was its largest shareholder with an almost 30 percent holding. ORG was second with 24 percent. 

CPMC reported CNY5.3 billion (USD736.3 million) in revenue in the first half of last year, up 1 percent from a year ago, and its net profit rose by 2 percent to CNY273.3 million (USD38 million). 

For seamless tin packaging, ORG, Baosteel Packaging, and CPMC have market shares of 20 percent, 18 percent, and 17 percent, respectively, according to the Qianzhan Industry Research Institute.

CPMC [HKG: 0906] ended 0.7 percent lower at HKD6.91 in Hong Kong. The stock is up 2.7 percent since the end of last year.

Editor: Emmi Laine