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Denise Tsang

Sophia Wong

Henderson Land Development suffered an unexpected setback yesterday after its bid to privatise Henderson Investment was voted down by the subsidiary's minority shareholders.

Analysts said shares of Henderson Investment could plunge by more than 20 per cent to below HK$6 per share from HK$7.20 before its suspension as a result of the defeated privatisation.

The proposed HK$5.68 billion privatisation was rejected at a special meeting of Henderson Investment shareholders yesterday.

Henderson Land failed to win enough support, though it had earlier raised its final offer price by 3.4 per cent to HK$7.60 a share to buy out the outstanding 24.55 per cent stake of Henderson Investment it did not already own.

Henderson Land vice-chairman Colin Lam Ko-yin said the privatisation proposal was defeated narrowly as investors holding about 70.19 million shares had voted against it.

'I am quite disappointed. I saw that a substantial number of minority shareholders had voted in favour,' he said.

He said 383 shareholders, or 87 per cent of those who voted - holding a total of 416 million shares - supported the privatisation motion while 57 shareholders voted against the plan.

Owners of more than 10 per cent of Henderson Investment's minority shares voted against the proposal, blocking the deal under stock exchange rules.

Mr Lam said shareholders voting against yesterday accounted for 2.49 per cent of total shares, which slightly exceeded the 2.455 per cent threshold.

He said most of the nay-sayers were representatives of stock clearing house Central Clearing and Settlement System (CCASS) who could not be identified.

Mr Lam reiterated the revised offer price was reasonable, despite the differing views of fund managers. The privatisation could not be raised again within 12 months, he said.

Fulbright Securities general manager Francis Lun Sheung-nim said Henderson Land had underestimated the influence of dissident minority shareholders such as Templeton Asset Management.

'In Henderson's case, the discrepancy between the offer price - including the revised price - and the actual asset value is too big,' he said.

Shareholder rights activist David Webb welcomed the result, saying: 'It is an excellent start for shareholder activists and sets a new benchmark for minority shareholders' protection, because it will deter controlling shareholders in future from making deep discount offers for minority interests.'

He had estimated that Henderson Investment's underlying assets were worth HK$12.26 per share. 'The Henderson case should raise the bar for privatisation,' Mr Webb said.

He said the collapse of the privatisation would set a good precedent.

Merrill Lynch analyst Clifford Lam said the failure would harm Henderson Investment's share price. 'It will fall to below HK$6 per share and never rebound [to the same level as Henderson's offer],' he said.

BNP Paribas Peregrine head of regional property Adrian Ngan Wai-hung said the share price could plummet to between HK$5 and HK$6 per share.

Henderson Investment shares last changed hands at HK$7.20, having gained 19 per cent last year. By contrast, Henderson Land shares plummeted 33.5 per cent last year to finish at HK$23.40.

Late last year, New World Development succeeded in winning shareholder approval to shuffle assets between its listed subsidiaries. Hang Lung Properties also successfully privatised subsidiary Grand Hotel in a group reorganisation.



Henderson plan voted down