Cheung Kong Holdings (長江實業) has offered US$24 billion in stock to buy out unit Hutchison Whampoa Ltd (和記黃埔) and plans to spin off its property assets in the biggest reorganization of Hong Kong billionaire Li Ka-shing’s (李嘉誠) corporate empire.
Cheung Kong investors can swap their shares in the Hong Kong developer for a stake in a new holding company called CK Hutchison Holdings Ltd (長和集團), the company said in an exchange filing yesterday. CK Hutchison plans to issue new shares to buy out minority owners of Hutchison Whampoa, a conglomerate which controls ports, retail and telecommunications operations.
The reshuffle ends Hutchison Whampoa’s 37-year history as a separate listed company, which Li kept after he became the first Chinese to control a British colonial conglomerate in 1979. The deal will simplify Li’s empire, which has grown to stretch beyond Hong Kong, allowing investors to more easily choose between a local property business and growing global assets in more than 50 countries.
Photo: Reuters
The streamlined business also paves the way for Li to hand the company to his eldest son, Victor Li (李澤鉅), currently Cheung Kong deputy chairman.
“As a person reaching a certain age, you want the company’s successor and all the executives here to more easily operate and to do well, so it’s not a surprise,” Li Ka-shing said at a press conference after the announcement. “I want the company to do well not only today, but also in the future. That’s my responsibility.”
CK Hutchison is to offer Hutchison Whampoa shareholders 0.684 CK Hutchison shares for every Hutchison share, according to the statement.
The deal values Hutchison Whampoa at HK$88.28 a share, a 1 percent premium to its last closing price and a 6.4 percent discount to its average closing price over the past three months, according to data compiled by Bloomberg.
After the deal, CK Hutchison plans to spin off the group’s combined property business, to be called Cheung Kong Property Holdings Ltd (長地集團), in a separate listing on the Hong Kong Stock Exchange, according to the filing.
The reorganization is good for both companies and reflects their real value, Li Ka-shing said.
He is to be chairman of both companies, according to the statement.
He has a net worth of US$28.2 billion, according to the Bloomberg Billionaires Index.
Li said he hopes to increase the dividend payout this year.
Cheung Kong shares fell 0.6 percent to HK$124.80 at the close of trading in Hong Kong yesterday, while Hutchison Whampoa gained 0.9 percent to HK$87.40.
The benchmark Hang Seng Index rose 0.4 percent.
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