Rongsheng Heavy Withdraws Plan to Acquire Engine Manufacturer

HONG KONG–China Rongsheng Heavy Industries Group Holdings Ltd. said it has decided to withdraw its CNY2.15 billion (US$336 million) bid to buy a Chinese diesel engine maker because of adverse market conditions.

The Hong Kong-listed shipbuilder said in a statement it on Friday submitted an application to the nation’s securities regulator for approval of its plan to withdraw a bid to buy Anhui Quanchai Group Corp., a diesel engine maker, from the local government of Anhui Province’s Quanjiao County. Anhui Quanchai Group’s unit Anhui Quanchai Engine Co. is listed on the Shanghai Stock Exchange.

The company said the decision to withdraw its bid is due to worsening global economic conditions as a result of the eurozone debt woes and other unforeseeable developments.

The planned withdrawal comes as the Shanghai-based shipbuilder in July warned investors that its first-half net profit, scheduled for Tuesday, is expected to fall “significantly” from a year earlier because of a decline in orders and prices of ships.

In the same month, the company’s non-executive chairman and co-founder Zhang Zhirong was accused by the U.S. Securities and Exchange Commission for insider trading ahead of a public disclosure that Chinese state-owned oil company Cnooc Ltd. plans to acquire U.S.-listed Canadian energy producer Nexen Inc. for $15.1 billion. China Rongsheng subsequently issued a statement on July 30 to state that the U.S. regulator’s investigation against Mr. Zhang has no impact on its operations.