Billionaire Peter Woo to take Wheelock private, handing HK$16.5 billion value windfall to shareholders

Hong Kong billionaire Peter Woo Kwong-ching is taking his flagship Wheelock & Co property empire private through a two-step transaction, handing investors a HK$16.5 billion (US$2.1 billion) windfall. Its shares jumped to an all-time high.

Wheelock plans to distribute its equity holdings in the two Wharf entities with a combined market value of HK$123.7 billion to its shareholders, based on their stock prices before trading was halted on Monday for the announcement. That exceeds the HK$97 billion market value of Wheelock itself. The tycoon will follow up with a take-private offer after the distribution.

The move comes as Woo seeks to untangle the interlocking companies to realise the value of their underlying assets, just as the Hong Kong real estate industry is going through its worst slump in decades amid a recession. Cracks in the retail and hotel sectors are widening after months of social unrest and the coronavirus outbreak, while the economy sinks deeper after contracting in 2019 for the first time since the 2009 financial crisis.

“It’s a win-win-win situation for all three businesses, given the current situation that the global economy finds itself,” said Justin Tang, head of Asian research at broker dealer United First Partners, in a note about the privatisation before the announcement. “Once this coronavirus [outbreak] clears, the Hong Kong protests might start again, so minority investors may think this [is] a good bail out deal.”

In the first step, Wheelock has proposed to distribute its 70.7 per cent stake in Wharf (Holdings) and 66.5 per cent holding in Wharf Real Estate Investment Company to its shareholders, according to its stock exchange filing on Thursday.