Chinese Firm Dumps U.S. Environmental Unit Just Two Years After Purchase

Engineering services company JSTI Group said it will sell its U.S. environmental services unit for $175 million, citing “changes in the global trading environment” for its decision to sell the company just two years after buying it.

A U.S.-based unit of France’s Eurofins Scientific SE, a provider of pharmaceutical, food and environmental testing services, will purchase TestAmerica Environmental Services LLC, JSTI said in a statement on Monday to the Shenzhen Stock Exchange.

JSTI purchased TestAmerica in 2016 for an undisclosed price. But the U.S. company has fallen into the red in the brief period under Chinese ownership, according to the filing. TestAmerica posted a net loss of about 21 million yuan ($3.0 million) in the first eight months of 2018, reversing a profit of about 9.3 million yuan for all of 2017, according to the filing. Its revenue in the first eight months of this year reached 971 million yuan, versus 1.5 billion yuan for all of last year.

“Due to changes in the global trading environment, the company decided to make strategic adjustments to its overseas business after careful consideration, including the proposed transfer of 100% of TestAmerica,” JSTI said. It did not provide more specifics.

The disposal would mark the latest in a growing series of global asset sales by Chinese companies, mostly by firms aiming to reduce their debt loads. One of the largest sellers has been financial conglomerate HNA Group, whose latest major divestiture saw it sell a 30% stake in its aircraft lessor unit Avolon Holdings Ltd. for $2.2 billion last month.

The sale also comes as the U.S. pays extra scrutiny to purchases of local assets by Chinese firms, and has taken steps to block sales of assets it considers strategic and important to national security. In August, Chinese buyer Shenzhen Energy Group Co. Ltd. said it was scrapping a year-old plan to buy three California solar farms, becoming the latest victim of growing U.S. efforts under the administration of President Donald Trump to block investments in sensitive areas.

Contact reporter Yang Ge (geyang@caixin.com)