UpdateShares in Li Ka-shing’s two main businesses jump after restructuring proposal
Hutchison stock will rise between 9 and 19 per cent “thanks to the unlocking of hidden value embedded under the existing vertical structure”
Shares in Hong Kong tycoon Li Ka-shing’s two principal business operations rose sharply yesterday on Monday after Friday night’s merger announcement.
Cheung Kong closed up 14.7 per cent at HK$143.20 on the news that shareholders would receive a one-for-one share in newly registered CK Hutchison Holdings (CKH), while group subsidiary Hutchison Whampoa hit an intraday high of HK$101 before closing at HK$98.25, up 12.5 per cent and its biggest rise since October 1997.
The benchmark Hang Seng Index closed up 0.45 per cent at 24,026.46 points.
The stock market reaction was in line with analyst expectations and mirrored strong trading in the two firms’ American depository receipts in New York on Friday after the proposed restructuring was announced.
Analysts said the deal would eliminate the existing holding company discount that investors had applied to both firms and help streamline executive decision making.
“Thanks to the unlocking of hidden value embedded under the existing vertical structure”, which had become “increasingly unstable” as the group companies overlapped, Hutchison should rise between 9 per cent and 19 per cent, Nomura analysts wrote.