BEIJING • Chinese billionaire Wang Jianlin's Dalian Wanda Group may buy out all outstanding shares of its property unit in Hong Kong for at least HK$31.3 billion (S$5.4 billion) to privatise a company that has seen its shares tumble about 50 per cent in less than a year.
The closely held group is considering an offer of HK$48 or more for each share in Dalian Wanda Commercial Properties, the real estate company said in a statement on Wednesday. That is 24 per cent above the stock's last closing price in Hong Kong.
Shares of Dalian Wanda Commercial, which did an initial public offering in late 2014, have fallen below the IPO price as the slowing economy weighed on the country's property market. The possibility that it may be delisted less than 16 months after its IPO implies prime financial real estate has lost its charm for Mr Wang.
Chinese developers are facing a tough environment, with property prices in smaller cities - home to the majority of China's urban population - still sinking, even as prices in top-tier cities continue to boom.
Weakness in China's property and related sectors, which account for an estimated 20 per cent of gross domestic product, has been a big drag on Chinese growth, which hit a 25-year low last year and is set to slow again this year.
Tycoon's growing business empire
From Hollywood to Fifa and France, Chinese billionaire Wang Jianlin has announced more than US$25 billion (S$33 billion) of investments and acquisitions during the first quarter of the year. There may be more to come as Mr Wang, China's richest man in the Bloomberg Billionaires Index, predicted in January that he would pursue five "substantial" acquisitions this year.
In the United States, he bought Godzilla-producer Legendary entertainment for US$3.5 billion, becoming the first Chinese to control a major Hollywood film company, while his AMC Entertainment Holdings plans to take over Carmike Cinemas to form the largest theatre-chain operator.
His group will invest more than €3 billion (S$4.6 billion) for a retail and leisure development project outside of Paris and spearhead a US$10 billion industrial park in the Indian state of Haryana.
Shares in the unit were up 18 per cent in morning trade at HK$45.8 a share, giving it a market value of around HK$26 billion. Before yesterday's jump, Dalian Wanda Commercial's shares had shed half their value since June last year.
Its shares rose 6.2 per cent to close at HK$38.80 in Hong Kong on Wednesday before the announcement. The stock, which has fallen 14 per cent this year, reached a peak of HK$77.20 last year.
It is easy to see why Mr Wang might want to beat a retreat. The property group's shares have traded below their IPO price for about half the time since they debuted. Last month, it stopped buying land for homes and offices amid chronic oversupply in smaller cities, where 38 per cent of its land bank sits. Big ambitions to roll out another 50 shopping malls this year in China look like the kind of thing that would make public shareholders nervous.
A delisting, though, may not be the end of public life. Mr Wang may be eyeing higher valuations on the mainland. He was already planning to raise around US$2 billion (S$2.7 billion) through an additional listing of shares in his property arm in Shanghai.