Henderson cashes in on sour sentiment in China
Lee Shau-kee's hopes of privatising his mainland property arm might have been boosted by souring sentiment towards the mainland market following cooling-off measures by Beijing, analysts said.
Henderson Land Development, Mr Lee's listed flagship, said yesterday it planned to take its 65.32 per cent-owned Henderson China Holdings private at a hefty discount for $1.3 billion.
This is Mr Lee's latest privatisation attempt after a $5.6 billion bid to privatise Henderson Investment in early 2003 was voted down by minority shareholders because of the low offer price.
'Sentiment towards the mainland property sector is relatively negative at present and this would help increase the likelihood for Henderson Land's privatisation to get through,' Dao Heng Securities research head Eric Yuen Chi-fung said.
Last week, Beijing imposed tough measures including taxes and restrictions in a bid to curb speculation in the overheated property sector.
Henderson Land plans to pay $7.50 cash per share for the 172.64 million shares it does not own in Henderson China, valuing the arm at $3.73 billion.
The offer price represents a premium of 56.25 per cent to the stock's last closing price of $4.80 on Friday. Trading was suspended yesterday.
However, it is at a steep discount of 46.28 per cent to its net asset value of $13.96 per share at the end of December last year, according to figures derived from its interim report. This has raised concerns about minority shareholders' interests being squeezed.
'Henderson Land is undoubtedly the biggest winner because it can buy the mainland assets at half price,' Fulbright Securities general manager Francis Lun Sheung-nim said. 'The steep discount may put minority shareholders at a disadvantage. But they may reluctantly accept the offer, given Henderson China's sluggish share price performance over the years.'
The company went public at $21.50 in 1996.
'Unlike the failed deal over Henderson Investment, which owns cash-spinners Hong Kong and China Gas and Hong Kong Ferry (Holdings), shareholders at Henderson China may want to cash out quickly due to its disappointing operations,' said an investment banker with a regional brokerage.
Earnings at Henderson China have fluctuated in the past few years and the company recorded a net loss of $12.08 million in the six months to December last year.
