Hot stock: Jardine Strategic up 36.5% on proposed Jardine Matheson acquisition

SHARES of mainboard-listed Jardine Strategic Holdings hit a one-year-seven-month high of US$37.50 on Monday after Jardine Matheson Holdings said it will simplify its parent company structure.

The move will see Jardine Matheson acquiring the 15 per cent of Jardine Strategic it does not already own in a proposed acquisition valued at about US$5.5 billion.

Shares of Jardine Strategic closed up 19.49 per cent at US$32.80 on Monday, and were the third most traded by value. This was after share prices rose 36.5 per cent at pre-open to hit an intraday high of US$37.47. The last time the counter closed near this level was on July 19, 2019.

A Singapore Exchange circuit breaker was also triggered during early morning trade. The circuit breaker activates when incoming orders potentially match an existing order at a price outside circuit breaker price bands. When this occurs, a five-minute cooling-off period is triggered and the incoming order will be rejected.

Trading can still take place during the cooling-off period, albeit within the price bands. All existing orders will not be affected and new orders within the price band can still take place.

The circuit breaker covers Straits Times Index (STI) and MSCI Singapore Index component stocks and units, among others. Hong Kong-registered Jardine Matheson was added to the STI in September 2008, with five of its subsidiaries, including Jardine Strategic, joining the index later.

Meanwhile, shares of Jardine Matheson closed up 15.5 per cent at US$62.0 on Monday.

In the proposed deal, Jardine Strategic shareholders will be entitled to receive US$33 for each share that they own. The acquisition is expected to become effective by the end of April 2021.

Upon completion, Jardine Matheson will be the single holding company for all its Jardine subsidiaries. The move will result in a "conventional ownership structure and a further increase in the group's operational efficiency and financial flexibility".

Jardine Matheson plans to cancel Jardine Strategic's 59 per cent shareholding in the former through a reduction of capital at Jardine Matheson's annual general meeting in 2022.

Jardine Matheson is the listed holding entity of the Jardine group of companies - which has businesses in sectors such as property, retailing, hotels and motor vehicles, to name a few.

The group holds an 85 per cent stake in Jardine Strategic - which in turn has interests in property developer Hongkong Land, car dealer Jardine Cycle & Carriage, hotel group Mandarin Oriental and Dairy Farm - which owns grocer Cold Storage and Guardian - a health and beauty retailer.

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