Jardine Matheson to incorporate Jardine Strategic via US$5.5b cash acquisition
JARDINE Matheson Holdings announced on Monday it will simplify the parent company structure of the group by acquiring the 15 per cent of Jardine Strategic Holdings it does not already own. The acquisition is valued at approximately US$5.5 billion.
Upon completion, Jardine Matheson will be the single holding company for all its Jardine subsidiaries, a move which the group said will result in a " conventional ownership structure and a further increase in the group's operational efficiency and financial flexibility".
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.
Further, Jardine Matheson said it intends to cancel the 59 per cent shareholding in Jardine Matheson held by Jardine Strategic through a reduction of capital at Jardine Matheson's annual general meeting in 2022.
At US$5.5 billion, the acquisition price represents a 20.2 per cent premium to the last closing price of US$27.45 per Jardine Strategic share on March 5. The price is also at a 29 per cent and 40.3 per cent premium to the volume-weighted average closing price per share over the one-month and six-month period respectively ended March 5.
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"The simplification of our ownership structure is a natural step in the evolution of the group and will create value for our shareholders," said Ben Keswick, executive chairman of Jardine Matheson.
"Taking full ownership of Jardine Strategic is consistent with our policy of investing further in the growth prospects of our existing businesses and highlights the benefits of consistently maintaining the group's financial strength."
Founded by Scottish traders William Jardine and James Matheson in 1832, the company has resisted takeover attempts with its cross-holding structure, allowing its owners to control most parts of the Jardine empire with a relatively small stake.
The Hong Kong-registered company was added to The Straits Times Index in September 2008, with five of its subsidiaries, including Jardine Strategic, joining the index later.
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, auto dealer Jardine Cycle & Carriage, hotel group Mandarin Oriental and Dairy Farm - which owns grocer Cold Storage and Guardianm, a health and beauty retailer.
Both Jardine Matheson and Jardine Strategic will announce their FY2020 preliminary results this Thursday. Jardine Matheson said it expects results "to be in line with market expectations, with full-year underlying net profit of US$1,085 million and underlying earnings per share of US$2.95".
As at 3.46 pm on Monday, Jardine Matheson was trading 14.9 per cent or US$8.01 higher at S$61.70; Jardine Strategic was trading 19.5 per cent or US$5.36 higher to US$32.81.
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