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source from:WSJ
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Dalian Wanda Raises Buyout Offer for Property Arm
Chinese conglomerate increases 4 billion Hong Kong dollars -plus offer by 10%
By WEI GU
May 30, 2016 4:19 a.m. ET
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Chinese property-and-entertainment conglomerate Dalian Wanda Group Co. boosted its buyout offer for its 4 billion Hong Kong dollars -plus Hong Kong-listed commercial property unit, calling the raised bid its best offer.
Wanda Commercial Properties Co. said in a statement to the Hong Kong stock exchange that its parent company will offer 52.80 Hong Kong dollars for the company’s shares, an increase of 10% over its earlier offer of 48 Hong Kong dollars per share. The announcement confirms an earlier Wall Street Journal report that the company planned to boost the offer by that amount.
Shares of Wanda, controlled by Chinese billionaire Wang Jianlin, fell by 1.4% after they resumed trading on Monday afternoon to finish at 49.30 Hong Kong dollars a share and below the offering price of 52.8 Hong Kong dollars, reflecting uncertainty over the deal.
China’s stock regulator said recently that it is going to scrutinize deals involving companies delisting from overseas exchanges and planning to go public again domestically at a much higher valuation.
Hong Kong regulators have taken a few weeks to approve the deal, because of the unusual funding structure of the transaction, according to people familiar with the matter. Unlike previous deals which were mostly funded by the buyer’s own cash and borrowing, Wanda has relied on a number of Chinese institutional investors to fund the deal.
The plan is to relist the company at a higher valuation in the domestic market. Wanda had tried listing the commercial-property arm at home before turning to the Hong Kong IPO market in late 2014, but opted instead for the Hong Kong market because Beijing at the time wanted to cool the domestic property market and didn’t allow developers to raise more money. Now the government’s focus has shifted to support the real economy and create jobs, analysts say.
Wanda resubmitted its application to China’s securities regulator on Sept. 2, official records show.
It could consider a backdoor listing if it wants to skip the line—China has 768 companies in the listing pipeline as of the end of April. A backdoor listing, however, could trigger other legal complexities, such as obtaining special approval for having foreign shareholders, lawyers and bankers say.
Wanda would need 75% of Hong Kong shareholders to accept the tender offer, with less than 10% of them objecting. The Beijing-based company has been public for less than two years, so much of its shares are in the hands of institutional shareholders such as Kuwait Investment Authority and China Life Insurance Group Co. The concentration of shares in institutional hands has made the deal less unpredictable, say analysts.
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