A group led by Malaysian billionaire Quek Leng Chan increased its offer to take Guoco Group Ltd. private to HK$9.37 billion ($1.2 billion) after some investors said the initial HK$8.25 billion bid was too low.
In addition to the original per-share payment of HK$88 the buyers will pay HK$12 a share when the buyout provision of the deal is either satisfied or waived, the company said in a Hong Kong stock-exchange filing yesterday. The buyout group won’t further increase the offer, Guoco said.
The revised offer of HK$100 per share is 2.6 percent more than the closing price of HK$97.45 on April 22. The stock was suspended yesterday pending the increased offer and will resume trading in Hong Kong today. The stock has surged 38 percent since the day before Quek group first made its offer on Dec. 12.
The original HK$88 offer was “unfair” and “absurd,” given that Guoco’s balance sheet alone could support a higher price, without Quek contributing, Sandy Mehta, Hong Kong-based chief executive officer of Value Investment Principals Ltd., said on Dec. 13. Mehta’s fund then owned Guoco shares.
The company has cash and short term funds of HK$11.6 billion on Dec. 31, rising from HK$8.8 billion on June 30, according to the company’s interim report for the six months through December.
The proposal will give Guoco Chairman Quek more control of the company’s 14 percent stake in Bank of East Asia Ltd., Hong Kong’s biggest family-run bank. Quek is making the bid together with related parties, including a unit of Hong Leong Co., in which he has a 49 percent stake.
Guoco, based in Hong Kong, gained 1 percent on April 22, the last date of trading before the suspension.