Wanda Group offers price to privatise property unit
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-
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.