Socam falls on plan to take unit private

Shares of Shui On Construction and Materials (Socam) fell after it proposed a high premium offer for the potential privatisation of its London-listed unit, China Central Properties.

Socam, which owns 42.9 per cent of China Central, has proposed to buy the remaining shares in an all-share or a mixed cash-and-share offer. The cash portion could cost the Hong Kong-listed company ?0.07 million (HK$340.47 million).

In an announcement filed with the Hong Kong stock exchange, Socam said China Central's shareholders might opt for 0.94864 new Socam share for each share they own, or 0.47432 new Socam share plus 27.50 pence in cash for each share.

The offer represents 66.92 pence for each China Central share, 31.21 per cent higher than the closing price of 51 pence on Monday. However, it is 33 per cent lower than 100 pence during the stock's debut two years ago.

Based on Socam's last close of HK$8.05, before trading was suspended on Friday pending the issue of this announcement, the offer values the entire issued capital of China Central as much as ?88.17 million.

Shares in Socam dropped 8.69 per cent to an intraday low of HK$7.35 when trading resumed yesterday afternoon before closing at HK$7.80. 'The fall indicated the high premium offer for China Central may not gain support from shareholders although the long-term prospects of the mainland property market remains positive,' said Matthew Kwok, head of research at Tanrich Financial Holdings.