Quek Leng Chan offers HK$8.25b to take Guoco Group private

PHOTO: Quek Leng Chan offers HK$8.25b to take Guoco Group private

HONG KONG - A group led by Malaysian billionaire Quek Leng Chan offered HK$8.25 billion (S$1.3 billion) to take Guoco Group Ltd private after the financial and real-estate company trailed a rally in Hong Kong stocks.

The group is offering HK$88 a share, 25 per cent more than the closing price before the stock was suspended on Dec 4.

Guoco jumped as much as 29 per cent ono wednesday after trading resumed.

It closed at HK$92.05, up 30.6 per cent. The proposed privatisation would give Guoco chairman Quek more control of the company's 15 per cent stake in Bank of East Asia Ltd, Hong Kong's biggest family-run bank, worth about HK$9.5 billion.

Mr Quek's net worth is estimated at US$3.9 billion on thursday, according to the Bloomberg Billionaires Index.

Guoco had fallen 2.4 per cent this year before yesterday, trailing a 21 per cent gain in the benchmark index.

A buyout "will provide the offeror group with greater flexibility to support its future business development," Guoco said in the statement.

Yesterday's offer was made by a subsidiary of Hong Leong, which is 49 per cent controlled by Mr Quek.

Guoco reported a net loss of HK$1.29 billion for the year ended June 30, compared with net income of HK$4.16 billion for the previous 12 months as weaker financial markets trimmed profit from its property and financial units, according to its annual report.

Bank of East Asia may become an acquisition bet, Deutsche Bank AG said last month after Sumitomo Mitsui Financial Group Inc won approval from the US Federal Reserve to boost its holding in the Hong Kong lender to as much as 9.9 per cent from the current 4.7 per cent.

A unit of Sumitomo Mitsui, Japan's second-biggest bank by market value, agreed to buy new stock in Bank of East Asia on Dec 4, doubling its stake to 9.5 per cent.

Spain's CaixaBank SA and Guoco Group were among shareholders that have increased their stakes in Bank of East Asia as its shares underperformed those of local rivals, Deutsche Bank analyst Sophia Lee said last month.

The two are the biggest investors in the bank.

Still, taking Guoco private would mean Mr Quek would lose one source of financing, said Mike Werner, an analyst at Sanford C Bernstein & Co.

"By privatising, they won't be able to raise equity to support purchases and/or a possible takeover for BEA," Mr Werner said.