Hopewell privatisation plan gains support from its second largest shareholder
- Southeastern Asset Management, which owns 7.99 per cent of Hopewell, voices support for the privatisation motion
- Analysts caution that effort to privatise must meet a high threshold of shareholder approval
Property tycoon Gordon Wu Ying-sheung’s plan to privatise Hopewell Holdings has gained momentum after the company’s second largest shareholder, Southeastern Asset Management, expressed support for the HK$21.2 billion (US$2.71 billion) delisting plan.
Southeastern, a US fund company headquartered in Memphis, Tennessee, issued a statement on Monday morning saying it “does not intend to oppose the take private transaction” of Hopewell announced on December 5.
“Southeastern believes its clients and the market benefit by knowing Southeastern is not planning an opposition,” the fund company said in a statement.
Southeastern is Hopewell’s second-largest shareholder with a 7.99 per cent stake in the company. Wu and his family are the largest shareholders, with a combined 36.93 per cent, according to stock exchange data.
The deal, if successful, will allow Southeastern to cash in HK$2.699 billion from its holding.
Wu, 83, is founder and chairman of Hopewell, with a net worth at US$1.4 billion, ranking as the 48th richest man in Hong Kong, according to Forbes.
Last week Wu and family offered HK$38.8 per share to buy out the 63.07 per cent of the shares owned by other investors to take the company private. It will call for a shareholders’ meeting to vote for the deal. To go ahead, the motion will need 75 per cent of shareholders to vote in favour, while 10 per cent voting to reject the deal would be enough to scuttle the plan.
“The offer price represents almost 50 per cent premium of the last trading dates of the company which is reasonable. The second largest shareholder Southeastern Asset Management may like to let the deal to go ahead to cash in its investment,” said Ben Kwong Man-bun, a director of Hong Kong brokerage firm KGI Asia.
“However, it is still hard to say if other shareholders will agree with the deal. Some may still want to bargain for a higher price while some may like to keep the investment for longer term. In Hong Kong a privatisation scheme can only go ahead if less than 10 per cent shareholders oppose it. The threshold is high and many past privatisation deals have collapsed in Hong Kong,” Kwong said.
Previous efforts by major conglomerates to privatise assets have been unsuccessful, including New World Development’s effort for New World China in 2014, and New World Department Store in 2017.
“Some investors may think the offer price is not attractive enough,” said Hildy Ling, equity analyst of Morgan Stanley in a research report about Hopewell’s privatisation plan.
Hopewell’s share were closed at HK$32.90 on Monday, down 1.8 per cent from Friday following as sharp surge after the privatisation plan was announced on Wednesday.