Henderson Land offers HK$12.1b for unit's assets

Shareholders to receive HK$5 a share after sale

Henderson Land Development has proposed to buy property, hotel and security services assets from Henderson Investment for up to HK$12.11 billion and denied market speculation that it plans to buy out the unit for the third time.

Henderson Investment said it would pay up to HK$5 per share to shareholders after the sale - which includes 31.36 per cent of Hong Kong Ferry (Holdings) and 44.21 per cent of Miramar Hotel and Investment. Its 38.47 per cent stake in Hong Kong and China Gas (Towngas), which recently gained control of the mainland's Panva Gas Holdings, is not included.

'Privatisation is a way to enhance value of Henderson Investment for minority shareholders. But after two failed attempts, we think that the distribution of HK$5 a share is also a way to enhance shareholder value,' Henderson Land vice-chairman Colin Lam Ko-yin told the South China Morning Post last night.

'We don't have any privatisation plan for Henderson Investment at the moment,' said Mr Lam, adding the company also was not planning to delist the subsidiary.

He said it would be easier to win shareholder approval for an asset sale as Henderson Investment only needed a simple majority of shareholders, or 50 per cent, to vote for the deal, compared with a privatisation, which can be blocked by 10 per cent.

Henderson Land, which owns 67.94 per cent of Henderson Investment, cannot vote on the sale but can vote on the dividend proposal. It can can get back HK$10.35 billion from the special dividends.

About 10.94 per cent of shareholders of Henderson Investment in January last year rejected a buyout offer from Henderson Land. A previous attempt in 2003 also failed.

Mr Lam values Henderson Investment at HK$17.65 a share including the HK$5 payout, Towngas at HK$12.06 per share, and two infrastructure projects at 59 HK cents.

Shares of Henderson Investment last traded at HK$14.58, a 1.53 per cent gain this year, before they were suspended from trading on Monday. Henderson Land's shares, suspended at the same time, last traded at HK$44.10. Trading in both stocks will resume today.

Mr Lam said that after the asset sale Henderson Investment would mainly own the Towngas stake and the infrastructure projects, and it would consider buying other assets when opportunities arose.

UBS analyst Eric Wong said the acquisition would streamline the shareholding structure of the Henderson Group and was a positive move to better reflect the value of Henderson Investment's stock.

'Henderson Investment's complicated portfolio is part of the reason for its shares trading at a discount to its net asset value,' Mr Wong said.

Ricky Tam Siu-hing, a director at Champlus Asset Management, expects Henderson Land to buy out Hong Kong Ferry and Miramar Hotel in the next group restructuring.

'Henderson Investment will be able to better reflect its value by solely holding Hong Kong and China Gas,' Mr Tam said.