Qualipak International Holdings, a maker of travel bags and backpacks, plans to buy loss-making mainland property developer Starthigh International from the controlling shareholder of both companies for HK$3.32 billion.
Qualipak shares rallied 6.56 per cent yesterday after it said it will buy Starthigh from Cheung Chung-kiu, who also controls Qualipak's parent, Yugang International. Payment will be made in convertible bonds and new shares.
The stock closed at 32.5 HK cents yesterday while Yugang finished unchanged at 12.7 HK cents.
Starthigh's core assets are 11 site in Chongqing city totalling 865,668 square metres valued at HK$6.4 billion as of the end of last month by independent valuer Savills.
'The acquisition provides Qualipak with an opportunity to take advantage of the Chinese company's strategic location' amid growing demand in the mainland property market, chairman Peter Lam How-mun said in a statement.
All the sites have been earmarked for development as hotels and commercial and residential complexes with a gross floor area of 3.07 million square metres.
Qualipak plans to raise about HK$930 million in net proceeds by placing 3.4 billion new shares at 28 HK cents each mainly to fund its property projects for the 11 plots.