HNA said to be in advanced talks for US$1 billion CWT takeover

HNA Group's corporate headquarters in the city of Haikou, China. The Chinese conglomerate is discussing a potential bid of around S$2.30 per CWT share.
HNA Group's corporate headquarters in the city of Haikou, China. The Chinese conglomerate is discussing a potential bid of around S$2.30 per CWT share. PHOTO: EPA/HNA GROUP

BEIJING (BLOOMBERG) - HNA Group is in advanced talks about making a formal takeover offer for logistics provider CWT after almost a year of exclusive talks, in a deal valuing the Singapore company at about S$1.4 billion, people with knowledge of the matter said.

The Chinese conglomerate is discussing a potential bid of around S$2.30 per CWT share, according to the people, who asked not to be identified as the negotiations are private. HNA may announce the offer within the next week at the earliest, though it has not yet reached a final agreement on all terms of the transaction, the people said, asking not to be identified as the information is private. 

A bid of S$2.30 per share would represent a premium of about 12 per cent to CWT's Wednesday closing price of S$2.06. Details of the offer may change, and it is possible the potential deal could still fall apart or be delayed, the people said. HNA plans to first buy a stake from CWT's biggest shareholder, C & P Holdings, which will trigger a takeover offer for the rest of the firm under Singapore listing rules, according to the people.

CWT shares, which rose as much as 1.5 per cent on Thursday (April 6), were up 0.5 per cent in the afternoon session when the company suspended trading pending an announcement. Representatives for HNA and CWT did not immediately respond to requests for comment.

HNA, one of China's most acquisitive companies, started talks in May last year, about buying a stake in CWT. The potential bid was delayed as the Chinese conglomerate deliberated which of its many entities would be used to make the offer, people with knowledge of the matter said in October. HNA operates airlines, hotels and tourism businesses and is pursuing an aggressive global expansion strategy that has included everything from hotel chains to money managers.

A purchase would further strengthen HNA's logistics operations, bringing it access CWT's network of regional offices and partners across 90 countries from Peru to Kuwait. The Chinese company bought Swissport International, the world's largest provider of ground and cargo handling services, last year for 2.7 billion Swiss francs (S$3.77 billion).

CWT was founded in 1970 and employs about 6,000 people, according to its website. It offers services including commodity logistics, freight forwarding, warehousing and defence procurement.

C & P Holdings owns 31.9 per cent of the company, according to CWT's 2015 annual report. CWT Chairman Loi Kai Meng jointly controls the investment vehicle with CWT director Liao Chung Lik and businessman Lim Soo Seng. CWT chief executive officer Loi Pok Yen, who is the chairman's son, holds a 5.4 per cent stake in the Singapore-listed company, the annual report shows.