IT Tech Packaging to acquire Tengsheng Paper

BAODING, PRC, June 27, 2019 /PRNewswire/, IT Tech Packaging, Inc. (NYSE MKT: ITP) ("IT Tech Packaging" or the "Company"), today announced that it has reached a definitive agreement to acquire 100% shares of Tengsheng Paper Co., Ltd ("Tengsheng"), a leading company in the paper-making industry in Hebei province. The agreement price is $320 million in cash. The acquisition will help IT Tech Packaging occupy the tissue paper market and consolidate market position in the North of PRC.

Tengsheng was founded in 2011, and its market scale and performance of the enterprise have been highly developed during recent years. IT Tech Packaging is located in Xiongan new area, where the state council decided to set up as a state-level new area, which is another new area of national significance after Shenzhen special zone and Shanghai Pudong new area. It is a grand plan for thousands of years and has important strategic significance. After the acquisition of Tengsheng, the value of its superior geographical location would show a far-reaching significance for the future development of IT Tech Packaging's business layout.

With the help of the acquisition, the industry chain of IT Tech Packaging will be supplemented, IT Tech Packaging’s market share in the paper making industry will be expanded, and other synergistic effect will be visible.

It is reported that the tissue paper production plant of IT Tech Packaging was rented from Tengsheng. After the acquisition, the company will obtain Tengsheng’s stable production land, which could increase the efficiency of product. In addition, production cost will decline and the profit rate will rise. For that reason, IT Tech Packaging would own a strong price bargaining power, which is a significant competitiveness for development.

The acquisition is completed under the environment of deleveraging policy and economic downturn, which has caused many enterprises facing cash flow crisis, even bankruptcy. The acquisition could prove that IT Tech Packaging has a strong ability of business operation, and has a highly efficient liquidity. It also proved that leaders of IT Tech Packaging has a correct strategy vision and a remarkable corporate finance management ability. In addition, the acquisition demonstrates the company's determination to continue to expand its production line and market, and also shows us the company's broad vision. In a sluggish global economy, cash flow is more valuable than other financial ratio. Companies with abundant cash have more initiative and price bargaining power.

Relevant research shows that PRC's tissue paper consumption is rising rapidly. Tissue paper, as a rigid consumer goods, is closely related to the growth of national GDP, population growth, improvement of quality of life and other factors. Driven by the upgrading of consumption, the improvement of GDP and the improvement of living standards and other factors, the tissue paper industry contained a development trend. Since 2012, the compound growth rate of tissue paper consumption is 6.95%, the market scale has reached 98.8 billion yuan in 2016, and the year-on-year growth rate was 12.06%.

There were still have a large gap between PRC and developed countries in terms of the market scale, so PRC's tissue paper market has a huge potential to develop. The acquisition is expected to expand IT Tech Packaging’s tissue paper market production line, and IT Tech Packaging performance will be expected a rapid increase in the future.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North PRC. Using recycled paper as its primary raw material (except tissue paper products), the Company produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products etc.

With production based in Baoding and Xingtai in North PRC's Hebei Province, the Company has been listed on the NYSE MKT since December 2009. Nowdays, the company has a number of production lines and advanced automatic control equipments at home and abroad, and provides a diversified portfolio of products for more than 100 packaging and printing customers.