Fortune only favours those with chutzpah, if no one gets in their way. On Wednesday, shares in Hong Kong-listed developer Dalian Wanda Commercial Properties dropped 6 per cent on reports that shareholders were unhappy with the terms of a buyout from its parent. In particular, Dutch pension investor APG Groep, which holds about 5 per cent of the shares, said the price was too low. Correct.
Last month, privately owned Wanda Group offered to pay HK$52.80 per share to take the listed subsidiary private. The timing of the deal is strange. Dalian Wanda was listed just 18 months ago, selling new shares amounting to 13 per cent of the enlarged capital to fund expansion. Cornerstone investors (including APG) bought more than half of the shares at HK$48, pre-IPO. Those that have not sold their holding after the six month lock-up expired are probably surprised to find themselves on the receiving end of a buyout offer from the parent.
The odd timing is no cause for objection. The price is. It is barely one-tenth more than the book value of the company’s assets. Citibank estimates the net asset value per share at HK$90. The undervaluation of the shares is purportedly one of chairman and major shareholder Wang Jianlin’s motivations for the delisting.