Mergers & Acquisitions

Mergers & Acquisitions

Wanda Hotel’s shares soar on Wang Jianlin’s plan to turn it into a hotel and theme park manager

The conglomerate plans to list its remaining subsidiary companies in domestic and overseas market in the next three years.

PUBLISHED : Thursday, 10 August, 2017, 12:44pm
UPDATED : Thursday, 10 August, 2017, 11:28pm

Chinese magnate Wang Jianlin, fresh from an epic sale of 77 of his hotels and 13 theme parks to pursue what he calls an “asset light” business model, has injected the management and operations of his erstwhile assets into one of his Hong Kong affiliates, as he rearranges his corporate portfolio after closing China’s largest real estate disposal.

In an overnight announcement, Wang announced the sale of Wanda Culture Travel innovation Group and Wanda Hotel Management Co. for a combined 7.05 billion yuan (US$1.06 billion) to Hong Kong-listed Wanda Hotel Development Co. Wanda Culture builds and manages theme parks, while Wanda Hotel Management operates hotels.

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The reshuffling turns Wanda Hotel Development into a professional manager and operator of theme parks and hotels. Its shares surged after the announcement, soaring by as much as 40.5 per cent to as much as HK$1.63 in Hong Kong, the highest intraday level in more than two years. Shares changed hands recently at HK$1.44.

Dalian Wanda Group, the closely held conglomerate founded by Wang almost three decades ago, has ballooned into one of China’s biggest global asset buyers since 2015. From a property developer, it’s expanded into the world’s largest cinema operator, a luxury yacht builder, an athletics company and owner of the Iron Man triathlon races.

It’s come under the scrutiny of Chinese authorities in recent months, over concerns of its borrowings and the exposure of China’s banks to its debt.

Last month, Wang sold the ownership of his 77 hotels and 13 theme parks to Sunac China and Guangzhou R&F Properties Co. for a combined US$9.4 billion to raise funds to repay loans, in the largest sale of property assets in mainland China’s corporate history.

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After the assets disposal, Wanda Hotel Development will still be responsible for the design, construction and operation management of the travel-related elements of its Wanda City real estate projects, for which it will receive 13 billion yuan in royalty feeds from Sunac China over the next two decades. Sunac will maintain the residential-related elements of the projects.

The conglomerate also said it plan to list its remaining subsidiary companies, including financial services, internet technology and sports companies , in domestic and overseas market in the next three years.

A second step of the assets reshuffling involves Wang selling stakes in overseas property projects in Australia, London, Chicago and Guilin to Dalian Wanda Commercial Properties Co.

The Hong Kong company was delisted last September for a US$4.4 billion buyout price, pending Wang’s promise to shareholders to re-list by August 31 next year the company on a stock exchange in mainland China, where companies on average trade at double the price-earnings ratio as their peers in Hong Kong.

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