PCD rallies on buyout bid

Beijing retailer offers founders HK$2 billion for their shares

PUBLISHED : Saturday, 02 February, 2013, 12:00am
UPDATED : Saturday, 02 February, 2013, 4:25am

The shares of high-end department store operator PCD Stores rose strongly yesterday after an announcement that the parent company of Beijing's largest retailer has launched a takeover bid with a planned purchase of a 39.53 per cent stake in the firm.

The deal pushed PCD Stores 17.43 per cent higher at HK$1.28 in the morning before closing the day 9.17 per cent ahead at HK$1.19.

Shares worth about HK$217 million were traded.

The stock resumed trading yesterday following its suspension since January 25.

According to a Hong Kong stock exchange filing on Thursday, Beijing Wangfujing International Commercial Development plans to pay HK$2 billion to buy 1.66 billion shares from Bluestone Global and Portico Global, controlled by PCD Stores' executive directors and founders Alfred Chan and Edward Tan.

The former would then offer HK$1.20 each for the remaining PCD Stores shares, the filing said.

Analysts believe the acquisition will benefit both parties, who will enjoy the synergy effect in the long run.

"The acquisition price offered by Wangfujing is relatively low, showing PCD Stores' shareholders were keen to sell the shares," said a retail analyst who declined to be named.

Wangfujing International is the parent of Shanghai-listed Beijing Wangfujing Department Store, the largest department store operator based in Beijing. The latter runs 26 stores in Beijing, Guangdong, Hubei, Sichuan and Inner Mongolia.

Essence Securities said in a research note yesterday Wangfujing International was very likely to inject PCD Stores into the listed firm after the acquisition.

Last month, PCD Stores warned that the net profit for last year was expected to see a notable decline because of increasing costs on new shops and labour and less income from a management consultancy service.

As of June last year, PCD Stores operated and managed 18 high-end and luxury department stores and three malls in Beijing and other provinces.

Its stock has slumped more than 40 per cent since it was listed in Hong Kong in December 2009.

In November, Wang Heng, the chairman of Nanjing-based department store operator Golden Eagle Retail, increased his stake in PCD Stores to 7.05 per cent and became the second-largest shareholder of the company.