China property

Chinese developer Future Land’s US$650 million privatisation bid rejected by shareholders

Billionaire Wang Zhenhua’s plan to take his Hong Kong-listed Future Land Development private failed after shareholders rejected the HK$3.30 per share cash bid

PUBLISHED : Tuesday, 17 October, 2017, 5:52pm
UPDATED : Tuesday, 17 October, 2017, 10:51pm

Chinese billionaire developer Wang Zhenhua’s HK$5.1 billion (US$650 million) bid to take his Hong Kong-listed real estate company Future Land Development private failed after shareholders rejected the buy-back offer because they believed the company is worth more.

The property company scrapped its privatisation proposal after more than 10 per cent of individual shareholders voted against it, the company said during an extraordinary general meeting Tuesday morning.

“We respect the decision by the market and shareholders,” Kenny Chan, company secretary and executive director at Future Land Development, told the media after the meeting.

Future Land’s chairman Wang announced his bid for Future Land Development in July. The buy-back offer of HK$3.30 per share cash for all the outstanding shares in the Shanghai-based developer amounted to 27 per cent of all the shares in issue.

Future Land, among China’s top 15 developers and with sales totalling 65 billion yuan in 2016, also has a listed subsidiary, Future Land Holdings, in Shanghai.

Although the HK$3.30 per share offer represented a 17 per cent premium to where the stock traded on the last business day before the privatisation announcement, some shareholders were clearly not happy with the offer, as they had valued the company much higher.

Future Land’s Hong Kong shares jumped to a record HK$4.58 on September 21 following the July announcement of the privatisation plan.

The shares stood at HK$3.85, about 16% above the takeover offer, right before trading was suspended on Tuesday morning ahead of the extraordinary general meeting.

“I didn’t accept the plan as I think Future Land is worth at least HK$5.50-6.00 (per share),” said Mr Yi, a mainland investor who holds Future Land shares, after the meeting.

“The company is growing fast, chairman Wang should focus more on developing properties rather than getting involved in capital matters,” he said.

Deutsche Bank last month raised the target price of Future Land to HK$5.17 per share, notwithstanding the share buy-back plan, citing the company’s stronger-than-expected sales and ongoing land acquisitions.

Future Land is among the property developers seeking to delist from the Hong Kong stock exchange, where until this year, the benchmark Hang Seng Index and the Hang Seng China Enterprises Index traded at the lowest price-earnings ratios among Asia’s major bourses. This has had a negative impact on mainland property developers listed in Hong Kong.

“Since its listing in 2012, (Future Land’s) share price performance has not been satisfactory,” said chairman Wang in July, at the time of the share buy-back announcement. Wang added that the depressed share price had adversely affected the company’s reputation and therefore its business and employee morale.

Last year, Dalian Wanda Commercial Properties delisted from Hong Kong for similar reasons.

But mainland property stocks have experienced a significant rebound in recent months, with many doubling their share prices.

For this reason, some analysts said that they believe property developers are unlikely to consider privatisation for a while.