Chow Tai Fook to take NWS private in HK$35.5 billion deal

HONG Kong’s billionaire Cheng family is offering to buy the NWS Holdings shares that it does not own and take the company private in a HK$35.5 billion (S$6.1 billion) deal.

Chow Tai Fook Enterprises, the property dynasty’s investment holdings flagship, made an offer of HK$9.15 per share, according to a statement to the Hong Kong stock exchange on Tuesday (Jun 27). The offer is a 14.5 per cent premium over the last closing price.

Shares of New World Development, the Chengs’ conglomerate, and NWS Holdings were halted on Friday, and will resume trading Tuesday at 9 am local time.

New World Development, which currently holds 2.38 billion NWS shares, will receive about HK$21.8 billion from the disposal, the statement shows.

Hong Kong’s developers are grappling with a property market that is in a rare downturn, with higher interest rates expected to continue weighing on sales. Major developers have resorted to offering discounts and various perks to boost sales.

In New World’s first-half earnings, the developer saw underlying profit fall 14 per cent to HK$3.4 billion due to Covid-19 disruptions. The company then said that its deleveraging plan would include capex optimisation, disposals of non-core assets and a dividend reset.

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Weaker home prices in the second half of this year mean that developers with high leverage ratios could try to offload their properties more aggressively, said Bloomberg Intelligence analyst Patrick Wong.

New World, with a business spanning construction, insurance and hotels, recently sold a hotel and an office property. It had a total asset value of approximately HK$621.9 billion at the end of last year, according to its website.

HSBC, BOCI Asia and ING Bank are advising on the deal. BLOOMBERG