China Rerun, Huachen Discuss Merger

DAQING, China - China Rerun Chemical and Liaoning Huachen Petrochemical are discussing potential areas of cooperation, including a merger of the companies equity, Rerun disclosed last month. The move is in accordance with Reruns strategy to acquire and consolidate small and medium lube blenders throughout China.

China Rerun officials said the companies aim to explore new opportunities for mutual growth in various areas, including financing, expansion and marketing, according to a statement in Chinese. Rerun will run background checks in Huachen to see if it makes a good candidate.

China has over 4,000 small and medium-sized lube producers, and we think consolidation is inevitable, and we want to play an important role during the process, Chairman Wu Xinghe told Lube Report Asia during an interview at Reruns offices here.

Last October, Rerun was listed on the London Stock Exchanges alternative investment market, a financing stage for fast-growing, small and medium enterprises. Rerun claims to be the first publicly listed small or medium-sized lube producer in China.

Huachen is just one of the several candidates Rerun is in talks with. We hope to reach an agreement with the companies in the next six months, Wu said.

Rerun prefers to partner with companies rather than buying out an entire company, Wu said. Rerun is interested in companies with extensive sales networks or strong research capabilities, but he declined to give more details about the specific partnerships the company is looking into.

China Rerun claims to be the leading lube producer in Heilongjiang province, and Wu said he plans to expand its business across China, especially in smaller cities. Huachen is a lube producer in the neighboring Liaoning province, also in northeastern part of the country.