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New World Development to Take Unit Private for $2.4 Billion
2014-03-14 11:05:33

Shareholders of New World China Land Ltd. (917) will get HK$6.8 a share, 32 percent more than the last closing price before today, the companies said in a joint statement to the Hong Kong stock exchange today. The unit’s shares surged while New World Development plunged the most since October 2011 after the company also said it will raise HK$14 billion selling rights shares at a 36 percent discount.

“Rather than have two middle weight entities in their respective fields that are not as widely followed as they would like, a larger combined entity would give the company more operational flexibility and larger market cap to warrant greater investor attention,” Robert Fong, a Hong Kong-based property analyst at Bloomberg Industries, said.

New World China rose 28 percent to HK$6.58 as of 10:06 a.m. in Hong Kong, the most since its debut in 1999. Its parent fell 12 percent to HK$8.55, the most since Oct. 18, 2011. The shares had been suspended since March 11.

New World China’s shares “have habitually been traded at a discount to their attributable net asset value,” the companies said. The offer provides an opportunity to its shareholders “to receive cash at a price significantly above the prevailing market price,” they said.

Photographer: Tomohiro Ohsumi/Bloomberg

Pedestrians walk past the K11 Art Mall, operated by New World Development Co., in Shanghai.

The property unit said it will apply to withdraw its listing on the Hong Kong stock exchange. The offer value of HK$18.6 billion is based on the assumption that all New World China options are vested and exercised in full.

Rights Issue

Separately, New World Development said it plans to issue as many as 2.26 billion rights shares at HK$6.20 each. The issue is based on one right share for every three shares, according to the statement.

New World Development will use the proceeds to finance development projects and land bank expansion, the company said.

Profit excluding property revaluations at rose 3 percent to HK$4.21 billion for the six months ended Dec. 31 from a year earlier, the company said on Feb. 26.

Cheng, 88, is 36th on the Bloomberg Billionaires Index with a net worth of $20.4 billion. In 2012, he retired as chairman of the developer he helped found four decades ago and also from Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain. He was replaced by son Henry Cheng.

HSBC Holdings Plc and Quam Capital are the financial advisers on the deal.

To contact Bloomberg News staff for this story: Fion Li in Hong Kong at +852-2977-6532; Bonnie Cao in Shanghai at +86-21-6104-3035

To contact Bloomberg News staff for this story: Fion Li in Hong Kong at +852-2977-6532; Bonnie Cao in Shanghai at +86-21-6104-3035

To contact Bloomberg News staff for this story: Fion Li in Hong Kong at; Bonnie Cao in Shanghai at

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.netIain McDonald

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