Billionaire Wang wins investors' nod for US$4.4b buyout

[BEIJING] Billionaire Wang Jianlin won shareholders' approval to buy out his property unit for HK$34.5 billion (S$5.9 billion), clearing the way for the biggest-ever privatisation deal in Hong Kong. The shares rose.

The HK$52.80-a-share bid for all of Dalian Wanda Commercial Properties 's Hong Kong-listed shares was supported by more than 88 per cent of minority investors at a meeting of shareholders in Beijing on Monday, with 7.3 per cent dissenting, the developer said in a statement on Monday. The deal needed a three-quarters majority to vote in favour of the plan and less than 10 percent opposing it for the plan to go through.

The decision sets the stage for the chairman of Dalian Wanda Group Co.to relocate the property developer's listing to mainland China, where companies are fetching higher valuations than in Hong Kong. The victory is a relief for the Chinese tycoon, one of Asia's most prolific dealmakers, who's recently been facing difficulties completing transactions at home and abroad.

Wanda Commercial shares climbed 2.7 per cent to HK$52.60 during early trading in Hong Kong on Tuesday.

Aside from being the biggest going-private deal on the Hong Kong stock exchange, the transaction is poised to be the largest acquisition to date for a tycoon who's already having his biggest year ever in terms of mergers and acquisitions, according to data compiled by Bloomberg.

For a Gadfly piece looking at the winners and losers of the privatisation click here.

Ahead of the vote, Mr Wang clinched the endorsement of the two largest minority investors in Wanda Commercial and the two most influential proxy advisory firms - Institutional Shareholder Services and Glass Lewis & Co.

Last month, Wanda Commercial made the rare move of issuing statements that the two biggest investors in the listed shares, China Life Insurance Co. and Kuwait Investment Authority, would vote for the deal after Bloomberg News reported that the US$483 billionasset-management arm of APG Groep NV balked at the offer as being too low.

A failed bid for Wanda Commercial would have added to what's been a tough few months for Mr Wang. This month, the tycoon scrapped a US$5.6 billion reorganization of his entertainment assets and in July, one of his units was forced to raise its offer for Carmike Cinemas after minority investors opposed the bid.

Beyond M&As, Mr Wang's Chinese movie-theatre chain operator, Wanda Cinema Line, has been losing market share amid a slowing domestic box office and he recently shut a theme park in Wuhan for renovation, less than two years since the park's opening.

Only 14 per cent of Wanda Commercial's shares are available to trade on an exchange. The rest are unlisted, registered in China and mainly controlled by Wang. Of the listed shares, about half are owned by 11 shareholders including OZ Management LP.

Wanda is among the companies seeking to take advantage of higher valuations in the mainland.

Since 2015, dozens of Chinese companies have announced more than US$50 billion of so-called going-private deals and Wanda would be the largest one involving a Hong Kong-listed company, according to Bloomberg data. Still, listing in the mainland's A- share market will require the approval of the China Securities Regulatory Commission.

"It makes sense for Wanda Commercial to relocate its listing to A-share market," said Raymond Cheng, an analyst at CIMB Securities. "But getting CSRC's approval will be a key issue for such a move."

Comparable mainland property companies trade at an average of 29 times estimated full-year earnings, according to Wanda Group. Wanda Commercial trades in Hong Kong at about ten times estimated earnings.

A jump in Wanda Commercial's value could help further enrich Wang, who vies with Alibaba Group Holding Chairman Jack Ma for the top slot among Asia's richest people on the Bloomberg Billionaires Index. Mr Wang has said he plans his business empire to have a market value of US$200 billion by 2020.

BLOOMBERG