GLP shares jump on buyout speculation

Global Logistic Properties’ assets in the San Francisco Bay area.
Global Logistic Properties’ assets in the San Francisco Bay area. PHOTO: GLOBAL LOGISTIC PROPERTIES

Shares of Global Logistic Properties (GLP) rocketed more than 13 per cent yesterday on the back of speculation that the warehouse provider could be a takeover target for a group of investors that includes China's sovereign fund.

The stock hit as high as $2.03 at around 12.30pm yesterday, well up on Tuesday's close of $1.79, before closing at $1.94 - up 15 cents or 8.4 per cent.

There were 129.6 million shares traded, making it the day's most hotly traded counter and the subject of a trading query from the Singapore Exchange (SGX).

Investors were galvanised by a Bloomberg report citing unnamed sources that said China Investment Corp, Hopu Investment Management and Hillhouse Capital Management have held talks about making a joint offer for GLP.

The suitors have reached out to potential partners to weigh their interest in joining the consortium, said the report, which added that any deal would depend on the receptiveness of GLP's biggest shareholder, Singapore sovereign wealth fund GIC. GIC owns a 36.93 per cent stake in GLP.

There is no certainty the consortium will proceed with a bid, the report stated.

GLP called for a trading halt following the SGX query and said it was not in discussions with the investor group "at this time" over a possible takeover.

The mainboard-listed company, with a market capitalisation of $9.28 billion, also said it was not aware of any information that might explain the unusual share price movement other than the Bloomberg report.

DBS Vickers Securities analyst Derek Tan noted that GLP is an attractive target for a potential takeover, given that it is trading at 0.7 times its book value and still increasing earnings.

"The long-term prospects for GLP remain positive despite the headwinds in today's operating environment," said Mr Tan, adding that a large part of the company's value lies in its fund management business, which is anchored by fairly large global players.

"But it remains to be seen whether this will result in a deal. It takes two hands to clap - much will depend on the willingness of GLP's major shareholder to want to realise value from their investment."

A buyout deal could be one of the biggest takeovers in Asia to date, while adding to this year's record flow of Chinese acquisitions abroad.

GLP holds a property portfolio of 562 million square feet across 118 cities in China, Japan, Brazil and the United States.

The company is due to announce its second-quarter results before the market opens on Nov 8.

A version of this article appeared in the print edition of The Straits Times on November 03, 2016, with the headline 'GLP shares jump on buyout speculation'. Print Edition | Subscribe