Peninsula operator soars 20pc as Kadoorie pumps $2.6b to up stake

Victor Zhong and staff reporter

Shares of Hongkong and Shanghai Hotels (0045) jumped nearly 20 percent after major shareholder Kadoorie family said it will invest HK$2.6 billion to increase its holding to 72.43 percent from 59.98 percent at an over 90 percent premium.

Kadoorie reached a conditional agreement on Thursday with Solis Capital and its parent, Seekers Partners, to buy 205 million shares of the owner of The Peninsula at HK$12.8 apiece, according to an exchange filing ahead of the trading hours by the group. This represented a 92 percent premium compared to last Friday's closing price.

The stock traded 19.55 percent higher at HK$7.95 yesterday, the highest since July 15, 2021, after retreating from the intraday peak of HK$8.50.

The company has maintained the required 25 percent public float after the share purchase, the announcement said.

The deal is still subject to regulatory approval. The completion of the deal is conditional upon the purchasers having obtained a waiver from the Executive Director of the Corporate Finance Division of the Securities and Futures Commission to make a mandatory general offer, wrote the statement.

The offer will terminate if the waiver has not been obtained by March 31, unless the purchasers and the seller agree to extend the deadline, the statement added.

Kenny Tang Sing-hing, managing partner at money manager Venture Smart Asia, said that the high premium was because the trading volume of the undervalued firm has been low. He did not rule out possible privatization in the future.

The hotel operator's price-to-book ratio, comparing a company's market value to its book value, stands at 22.10 times for the first half of 2021, according to the last interim report.

For the third quarter last year, the revenue per available room, a metric used in the hospitality industry to measure hotel performance, picked up to HK$1,378 from HK$937 for its Hong Kong business quarter-on-quarter.

Meanwhile, that of other Asia operations went up at a slower pace from HK$944 to HK$956, while the United States and Europe recovered to HK$3,874 from HK$2,215 over the same period.