Mainland-controlled China Everbright Group has reached an agreement to become the largest shareholder of construction and property company Kumagai Gumi (Hong Kong), with a 20.9 per cent stake.
Kumagai Gumi yesterday said its chairman, Yu Ching-po, had agreed to sell a 10.8 per cent stake in the company to China Everbright International for $652.5 million.
China Everbright International's parent, China Everbright Holdings, bought 42 million new shares from Kumagai Gumi last month.
Mr Yu was previously the largest Kumagai Gumi shareholder. His stake will fall from about 14 per cent to 3.1 per cent but he will remain chairman and managing director.
Kumagai Gumi said the parties had agreed on a sale price of $14.50 a share for the 45 million shares, a premium of 7.4 per cent above last week's close.
China Everbright International will pay for the stake by issuing Mr Yu with 33.08 million of its own new shares, valued at $7.89 each, and $391.5 million in cash. The sale will be completed by December 31.
Two additional directors will then be nominated to the Kumagai Gumi board by China Everbright International. The share sale will have to be approved by a meeting of Kumagai Gumi's independent shareholders.