Kerry Properties' share price soared 40 per cent yesterday following the announcement of plans to privatise the company.
Amid a mixed reaction from analysts to the deal, the shares jumped to the buy-out offer of HK$8.50 per share in early trade and closed at HK$8.40. More than 17.57 million shares changed hands. The shares were suspended on April 11 at HK$6.
BNP Paribas Peregrine head of regional property Adrian Ngan Wai-hung said the offer was reasonable given the stock's poor market performance. 'Like Henderson Investment, the share price [of Kerry] could shrink if the privatisation plan fails,' Mr Ngan said.
He said the decision of institutional investors would play a key role in the outcome of the proposal. 'Whether they accept [the offer] or not depends on the purchase price. I guess [the proposal] has a 60 per cent chance of success.'
UBS Warburg managing director Franklin Lam said the offer was reasonable in view of the uncertain outlook for the property market. He said the share-price premium was acceptable when compared to the privatisation offer for Henderson Investment earlier this year.
However, Morgan Stanley analyst Kenny Tse Chiu-ping said: 'The probability of a successful privatisation is very low since the offer price is at least 15 per cent below reasonable level.'
Mr Tse said the offer translated into a 41.67 per cent premium to the last traded price and a 52.62 per cent discount to the net asset value (NAV) of HK$17.94 per share on December 31 last year.