NewChina Resources Enterprise disposes non-beer business to parent in HK$28 billion deal

The mainland’s state-owned conglomerate China Resources (Holdings) will pay HK$28 billion to buy all of the non-beer businesses of Hong Kong-listed China Resources Enterprise to dispose of the latter’s risks associated with the slowing economy and improve the share price performance.

The parent firm will pay HK$13.6 billion in cash and the rest by way of a promissory note.

Trading in shares of China Resources Enterprise, suspended since April 8, will resume on Tuesday.

Bank of America Merrill Lynch and Morgan Stanley will buy up to 242 million shares, or 10 per cent of China Resources Enterprise’ issued share capital, at an offer price of HK$12.7 per share. The company will also pay a special cash dividend of HK$11.5 per share.

Combined, they represent a premium 59.2 per cent from the closing price of HK$15.2 on the last trading date before the announcement. The deal will reduce the public floatation of the company to 38 per cent from 48 per cent currently. It is conditional upon the approval of independent shareholders, banks and third-parties as well as regulators.

As at the date of announcement, China Resources (Holdings) indirectly controls 52 per cent of China Resources Enterprise.