A group led by Malaysian billionaire Quek Leng Chan offered HK$8.25 billion ($1.1 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 percent more than the closing price before the stock was suspended on Dec. 4, according to a statement to the Hong Kong exchange. Guoco jumped as much as 29 percent in morning trading.
The proposed privatization would give Guoco Chairman Quek more control of the company’s 15 percent stake in Bank of East Asia Ltd., Hong Kong’s biggest family-run bank, worth about HK$9.5 billion. Quek’s net worth is estimated at $3.9 billion today, according to the Bloomberg Billionaires Index. Guoco had fallen 2.4 percent this year before today, trailing a 21 percent 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.
Guoco was 29 percent higher at HK$91 as of the midday break in Hong Kong, heading for the biggest increase since April 2001.
Today’s offer was made by a subsidiary of Hong Leong, which is 49 percent controlled by 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 U.S. Federal Reserve to boost its holding in the Hong Kong lender to as much as 9.9 percent from the current 4.7 percent.
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 percent.
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, according to data compiled by Bloomberg.
Still, taking Guoco private would mean Quek would lose one source of financing, said Mike Werner, an analyst at Sanford C. Bernstein & Co.
“By privatizing, they won’t be able to raise equity to support purchases and/or a possible takeover for BEA,” Werner said.