Insights on Unifrax’s strategic investment in Luyang

By Selena She and Zhang Zhengyi, Llinks Law Offices

Last summer, Unifrax Asia-Pacific Holding (UAPH) completed its partial tender offer for Shandong Luyang Energy-Saving Materials (Luyang), an A-share company listed on the Shenzhen Stock Exchange (SZSE).

Not only was it the largest A-share partial tender offer in 2022, but also the largest acquisition investment of the year by a US-based multinational in China.

In this article, the authors share first-hand insights on the latest strategic investment in the Chinese market by Unifrax through its Asian subsidiary, UAPH.


Selena She, Llinks Law Offices
Selena She
Llinks Law Offices

Unifrax is a leading global supplier of specialty materials, specialising in cutting-edge technologies for advanced filtration, electric vehicle battery systems and energy-saving applications. The multinational has more than 60 production facilities and 9,000 employees worldwide, and enjoys formidable advantages in terms of IP, exclusive patents and proprietary technologies.

The target of the acquisition, Luyang, is the largest producer of specialty materials in China, mainly involved in the research, development, production and sale of energy-saving materials, such as ceramic fibres, soluble fibres and lightweight refractory bricks.

The transaction was an unsolicited partial tender offer made by UAPH to all other shareholders of Luyang for a total of 125,863,248 shares, accounting for 24.86% of the total share capital of the listed company and corresponding to more than RMB2.7 billion (USD399.8 million) in value.

Previously, in 2014, UAPH had acquired 28.14% of Luyang’s shares by way of a negotiated transfer. Following the recent transaction, UAPH now holds 53% of shares in Luyang. By virtue of this transaction, UAPH consolidated its control over the company, thereby stabilising its equity structure.

From the perspective of long-term development, the transaction further reinforces strategic co-operation between Unifrax and Luyang. In future, Unifrax will continue to leverage its resource advantages to upgrade key equipment, bring in advanced technologies and improve quality control systems in support of Luyang’s international development.

Zhang Zhengyi, Llinks Law Offices
Zhang Zhengyi
Llinks Law Offices

Unifrax, as the largest shareholder of Luyang, also held conversations with Luyang’s local government, given that the transaction is expected to not only benefit Luyang’s own development, but also boost the economic growth of Yiyuan county, Zibo municipality and Shandong province, where Luyang is located.

Through its investment in and co-operation with Luyang, Unifrax also strengthened its development in the Chinese market, optimising its global strategic footprint.

The transaction marked the first foreign strategic investment completed by an overseas investor by way of a direct open tender offer in the Chinese capital markets since the implementation of the Foreign Investment Law in 2020.

It was also the largest single foreign domestic investment in the specialty chemicals segment of the Chinese A-share market to date.


Llinks Law Offices has been providing legal services to Unifrax since 2014. As UAPH’s exclusive legal counsel in China, Llinks was involved in and guided the transaction from start to finish.

In contrast with a domestic tender offer, the transaction was a tender offer made by an overseas investor directly to Chinese investors in the Chinese capital markets, involving such issues as foreign investor access and foreign exchange control.

Implementation of the Foreign Investment Law in 2020 provided a more inviting environment for foreign investors and simplified the approval and recordal requirements.

However, since there were no precedents in practice, the team on the project needed to promptly communicate with the Ministry of Commerce to clarify relevant requirements, as well as with the SZSE and the China Securities Depository and Clearing Corporation to understand the impact of updates to relevant laws and regulations in recent years, together with any changes in practice that the regulators may have on the transaction.

Additionally, involvement of a significant monetary amount necessitated co-ordinating offshore funding arrangements and providing explanations and clarifications to the offshore financiers and foreign shareholders of UAPH.

Luyang’s local government, hoping the transaction would further spur economic development of the region, also held parallel discussions with UAPH.

In view of the large number of parties involved, UAPH, out of consideration of project confidentiality, also requested that the transaction be completed with all possible haste. All of these elements posed challenges.


Leveraging familiarity with the client and insight into their business needs, Llinks gave full play to its experience in cross-border and open market transactions. From initial structure design, document drafting and negotiations to the eventual closure of the transaction and post-investment management, Llinks played a key role in keeping the process lawful, compliant and efficient.

Selena She is a partner at Llinks Law Offices. She can be contacted by phone at +86 21 3135 8770 and by email at
Zhang Zhengyi is a partner at Llinks Law Offices. She can be contacted by phone at +86 21 3135 8727 and by email at
Colin Shi and Wayne Chen, both partners at the firm, also contributed to the article