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Hong Kong property

New World Department Store’s privatisation plan fails to garner required support from shareholders

Company received 83.90pc approval of privatisation by independent shareholders, just shy of the 90pc required by law

PUBLISHED : Tuesday, 29 August, 2017, 4:31pm
UPDATED : Tuesday, 29 August, 2017, 5:19pm

Plans by the parent firm of New World Department Store China to take it private for HK$934.5 million have failed, after not managing to garner enough support from independent shareholders for a full buyout of the operation.

By the end of its final closing date on Monday, New World Department Store had received valid acceptances representing 83.90 per cent of shares owned by independent shareholders, just shy of the 90 per cent required to proceed under company law.

Thus “the offer has not become unconditional and is lapsed from 28 August 2017”, according to a company filing to the Hong Kong stock exchange.

Shares of New World Department Store lost 5 per cent to close at HK$1.9 after the announcement.

New World Development, which owns 72.3 per cent of New World Department Store, offered HK$2 a piece in June to buy out all the shares it did not already own, in what it said was a bid to better cope with a challenging retail operating environment.

New World to buy out its China retail unit in HK$934.5 million privatisation plan

Despite the price representing a 50 per cent premium over its last closing price before the company disclosed the privatisation plan, it was still 66 per cent below its listing price 10 years ago, of HK$5.8 per share.

Listed in Hong Kong in 2007, New World Department Store operates 40 outlets and two shopping malls in 22 Chinese cities.

Shares in the business have been struggling as traditional department stores have lost their lustre with shoppers, who have been gradually migrating online, or are choosing large format shopping malls.

The company almost passed the vote, but the result reflects some shareholders are dissatisfied with the offer price
Dickie Wong, executive director of research at Kingston Securities

“The company almost passed the vote, but the result reflects some shareholders are dissatisfied with the offer price,” said Dickie Wong, executive director of research at Kingston Securities.

While it won’t happen in the short term, Wong said the parent company was likely to restart the buyout proposal, as the company hopes to restructure its mainland China businesses.

Under listing rules, New World Development has to wait at least a year before it can make a renewed privatisation attempt.

Chaired by Hong Kong’s third richest family headed by Henry Cheng Kar-shun, New World Development successfully took its another subsidiary New World China Land, the Hong Kong developer’s mainland property arm, private in 2016 for HK$21.4 billion.

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