Days after the failure of a deal to boost its holding in HKCB Bank Holding, China Resources Enterprise (CRE) is to pay $1.67 billion to raise its stake in food supply arm Ng Fung Hong from 25.3 per cent to 54.4 per cent.
In a conditional agreement, CRE will buy the 29.1 per cent stake of 298.914 million shares in Ng Fung Hong held by parent China Resources (Holdings) at $5.607 a share.
The price represents an 11 per cent discount to the stock's last traded price before it was suspended with CRE yesterday, and values Ng Fung Hong's shares at $5.75 billion.
A condition of the deal is that the Securities and Futures Commission grants CRE a waiver from having to make a general offer for all Ng Fung Hong shares - which it would be compelled to do on reaching a 35 per cent holding.
The move reflects CRE's attempts to trim its reliance on the property sector and expand business that provides steady income amid the region's financial turmoil.
CRE project division general manager An Lu, said yesterday the consideration would be satisfied internally and by a so-called club loan of US$200 million arranged in June in preparation to double its indirect stake in HKCB Bank Holding to 60.6 per cent.
The funds have remained unused since CRE's failure to win Beijing's approval for the deal.
