China Resources Enterprise

CRE to pay $2.7b for stores of parent

PUBLISHED : Friday, 10 September, 1999, 12:00am
UPDATED : Friday, 10 September, 1999, 12:00am

China Resources Enterprise (CRE) is to pay $2.72 billion to acquire the retail businesses of its parent, China Resources (Holdings) (CRH).

The price for CRC Department Stores and Chinese Arts and Crafts stores represents a 26.9 per cent discount to their combined adjusted net asset values.

The acquisition would be financed with a cash payment of $680.61 million and with $1.36 billion to be raised from a placement of 113 million shares on completion of the arrangement by the end of next month, CRE said.

The remaining $680 million would be paid in cash on March 31.

ING Barings analyst Richard Lo said the acquisition price was fair, as the chains had a combined shop space of 500,000 square feet and some of the stores were at prime locations.

CRE would have about $4 billion cash on hand after the acquisition.

Chairman Ning Gaoning said CRE's next acquisition would be another subsidiary of its parent - China Resources Petroleum and Chemicals.

He gave no timetable for the deal.

The share placement would be CRE's second fund-rasing exercise on the stock market this year, and it would account for 5 per cent of the company's expanded share capital.

CRH's stake in CRE would rise to about 56 per cent from 52 per cent at present.

Last year, CRC Department Stores and Chinese Arts and Crafts stores recorded a combined loss of several million dollars, Mr Ning said.