The raising of the offer price by 11pc fails to sway sentiment A $3.5 billion privatisation of Kerry Properties has been rejected by minority shareholders despite the offer price being raised by more than 11 per cent. The latest privatisation rejection by minority shareholders highlights starkly different views of value in a market characterised by limited liquidity and few transactions. Yesterday, 56 per cent of the minority independent shareholders who voted - holding 98 million Kerry Properties shares - opposed the privatisation, while holders of 77 million shares supported the motion, said Chew Fook Aun, chief financial officer of Kerry Properties. According to the takeover code, the privatisation must fail if at least 10 per cent of independent minority shareholders vote against the proposal. Earlier, Robert Kuok Hock-nien's Kerry Holdings, which holds 61.67 per cent of Kerry Properties, raised its offer from $8.50 a share to $9.50 a share, a 39.75 per cent discount to the firm's adjusted net tangible asset value of $15.77 per share. The rejection follows Lai Sun Development's failed effort to privatise eSun Holdings for HK$79.9 million in May and Henderson Land Development's unsuccessful $5.6 billion privatisation of Henderson Investment in January. '[Kerry Holdings] stood a greater chance of success if it had increased its offer to over $10 a share,'' said JP Morgan analyst Raymond Ngai. Morgan Stanley property analyst Kenny Tse said the outcome was unsurprising considering that independent financial adviser NM Rothschild & Sons recommended that investors vote against the proposal, saying the offer was 'not fair and reasonable'. Analysts said the swing factor was likely to have been United States institutional investor Capital Group, which holds 5.33 per cent of Kerry Properties, although it declined to comment yesterday. With no chance of a further privatisation for at least a year, Kerry Properties stock is expected to come under selling pressure when trading resumes today. Deutsche Bank analyst Rachel Tong said in a report that shares of Kerry Properties would drop to between $7 and $7.50. Morgan Stanley believes near-term downside for the trading counter would be between 10 per cent and 15 per cent. Shares of Kerry Properties finished at HK$8.35 - 12 per cent below the offer price - before it was suspended yesterday. Last week, Merrill Lynch recommended that investors sell the stock, saying: 'With the risk that the transaction fails, we feel investors should exit now'. Mr Chew refused to say if Kerry Properties' controlling shareholder would re-launch the privatisation bid after 12 months. 'Kerry Properties' business should not be affected by the defeat,'' he said. Kerry Properties is part of the Kerry Group, the largest shareholder in the SCMP Group, publisher of the South China Morning Post.