Wanda Group of­fers price to pri­va­tise prop­erty unit

The Pak Banker - - COMPANIES/BOSS -

Chi­nese bil­lion­aire Wang Jian­lin's Dalian Wanda Group Co. is of­fer­ing HK$34.5 bil­lion ($4.4 bil­lion) to buy out its Hong Kong-listed prop­erty unit in the big­gest take-pri­vate deal on the ex­change ever, as it seeks a higher val­u­a­tion for the busi­ness on main­land stock ex­changes.

Wanda Group will pay HK$52.80 for each Hong Kong-traded share of Dalian Wanda Com­mer­cial Prop­er­ties Co., the com­pany said in a state­ment Mon­day, 10 per­cent higher than an ear­lier of­fer of at least HK$48 and 3 per­cent higher than its last traded price of HK$51.25 before it was halted April 22. The shares, which have been listed in Hong Kong for less than two years, fell to HK$49.25 af­ter re­sum­ing trad­ing on Mon­day.

Wang, who con­trols Wanda Com­mer­cial's Bei­jing­based par­ent, told China Cen­tral Tele­vi­sion May 22 that the unit is "sub­stan­tially un­der­val­ued" and must pro­ceed with the pri­va­ti­za­tion. The bil­lion­aire has been seek­ing in­vestors to help pur­chase as much as 14.41 per­cent of the shop­ping-mall op­er­a­tor and re- list it in main­land China, ac­cord­ing to a doc­u­ment sent to prospec­tive back-

ers.

Go­ing-pri­vate deals that aim to re­lo­cate over­seas share list­ings to Shang­hai or Shen­zhen have been un­der the spot­light af­ter China's stock reg­u­la­tor voiced con­cerns such trans­ac­tions could flood its mar­ket. Wanda's trans­ac­tion is pending share­holder and reg­u­la­tory ap­provals, ac­cord­ing to the state­ment.

The of­fer "might be a bit lower than in­vestors' ex­pec­ta­tion," Jef­frey Gao, a Hong Kong-based an­a­lyst at No­mura Hold­ings Inc., said by e-mail. "In­vestors need to worry about the risk" of the deal not go­ing through and the "time cost" in­volved. Wanda's pro­posed trans­ac­tion would be the big­gest go­ing-pri­vate deal on the Hong Kong stock ex­change, beat­ing Alibaba Group Hold­ing Ltd.'s pro­posal in 2012 to take its Hong Kong­traded unit pri­vate for as much as HK$19.6 bil­lion, ac­cord­ing to data compiled by Bloomberg.

In its pitch to in­vestors, Wanda Group cited an av­er­age val­u­a­tion of 29 times es­ti­mated full-year earn­ings for main­land list­ings, based on four com­pa­nies en­gaged in man­ag­ing free­trade zones and in­dus­trial parks. Wanda Com­mer­cial was trad­ing at about 6.4 times before trad­ing was halted in April, ac­cord­ing to data compiled by Bloomberg.

Wanda Group will pro­ceed with plans to buy out the prop­erty unit af­ter con­sid­er­ing whether to scrap the deal in the wake of Chi­nese reg­u­la­tory con­cerns, peo­ple fa­mil­iar with the mat­ter had said. The com­pany de­cided to con­tinue with the delist­ing af­ter "tak­ing into ac­count the pos­si­ble ad­verse com­mer­cial im­pact" if agree­ments with in­vestors back­ing the plan, al­ready ex­e­cuted in April, were to be ter­mi­nated, ac­cord­ing to the state­ment.

A unit of Ping An In­sur­ance (Group) Co., China's sec­ond­largest in­surer, has com­mit­ted to buy­ing 21.9 per­cent of the H shares, ac­cord­ing to the state­ment. Wanda Com­mer­cial's shares, which de­buted on the Hong Kong ex­change at HK$48, rose to a peak of HK$77.20 in June 2015. They've traded at an av­er­age price of HK$49.52.

The of­fer "pro­vides an at­trac­tive op­por­tu­nity for in­de­pen­dent H share­hold­ers to dis­pose of their H shares" and put their money in in­vest­ments with higher liq­uid­ity, the com­pany said in the state­ment, cit­ing the pre­mium pro­posed and the difficulty in oth­er­wise sell­ing their hold­ings in the mar­ket with­out hurt­ing the share price. "It is highly un­likely that an­other third party will be will­ing to pay a con­sid­er­able pre­mium" for the shares, ac­cord­ing to the state­ment.

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