HONG KONG (BLOOMBERG) - Wheelock & Co, one of Hong Kong's largest property developers, is offering shareholders a 52 per cent premium to delist and become a private company.
The Woo family, Wheelock's largest shareholder, is offering one share each of Wharf Real Estate Investment and Wharf Holdings to Wheelock investors, according to an exchange filing on Thursday.
Investors will also receive HK$12 (S$2.14) cash for every share of Wheelock they own.
The transaction aims to unlock shareholder value "through the elimination of the historical holding company discount of the company's stake in Wharf REIC and Wharf", Wheelock said.
Other benefits of the proposal include higher dividend income from Wharf REIC and Wharf shares in addition to a return on cash, plus enhanced choice for "shareholders through separate and direct ownership of Wharf REIC shares and Wharf shares with higher trading liquidity", according to the statement.
Wheelock holds around 66.5 per cent of the issued shares of Wharf REIC and about 70.7 per cent of Wharf, a property company that's also focused on development in mainland China and Hong Kong. The offer values Wheelock shares at HK$71.90 each, the statement said.
That is 52 per cent more than the last trading price before the stock was halted on Feb 24 pending the announcement. Based on the total number of Wheelock shares outstanding gives a transaction value of around HK$147.6 billion. Based on the total number of scheme shares of 667.4 million gives a value of about HK$48 billion, with the Woo family needing to pay around HK$8 billion cash.
"The number on the surface is large, but in fact the share prices of the other two companies are much lower," Raymond Cheng, a property analyst at CGS-CIMB Securities, said. "So there's a high chance for the major shareholder to succeed in the privatisation."
Mr Cheng added that for Wheelock's other shareholders, the best result would have been all-cash.The plan has almost 85 per cent of the price paid by one unit of Wharf's shares and another unit of Wharf REIC, which are subject to market fluctuations," he said.