FabChem China lower as hopes of bidding war fizzles

Explosives maker FabChem China Ltd was lower as hopes of a bidding war between Australia's Dyno Nobel and Orica for a substantial stake in FabChem, appear to have fizzled for now, dealers said. FabChem shares soared last week after the company said its major shareholders were in talks with two potential buyers. Dyno Nobel confirmed that it had begun preliminary discussions with the two main shareholders on acquiring a strategic holding, but that no agreement had been reached so far. While Orica's interest in FabChem was not confirmed, talks between Orica and FabChem shareholders reportedly ended unsuccessfully. "While markets are talking up the possibility of a bidding war for Fabchem, we think this is unlikely. Fabchem has reportedly ended discussions with the second party, Orica, which has no incentive to overpay for Fabchem," Kim Eng Securities said in a note. Kim Eng said it is recommending that shareholders "sell" FabChem at current levels following the recent run up. "While we continue to like FabChem, current valuations suggest that the counter has been overbought on speculative grounds," Kim Eng said, adding that its fiar value for FabChem is 0.79 sgd per share. FabChem was down 0.05 sgd or 7.58 pct at 0.61 sgd with 3.28 mln shares traded.