China Resources Shares Spike as Parent Pays More for Assets

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China Resources Enterprise Ltd. leapt to an 18-month high in Hong Kong trading after the state-backed brewer said it will increase a special dividend as its parent offered HK$2 billion ($258 million) more to buy its assets than initially agreed.

The assets, which include its money-losing retail venture with Tesco Plc, will be sold for HK$30 billion, the company said in a statement Thursday to the city’s stock exchange. The dividend will be raised to HK$12.30 from HK$11.50 a share.

China Resources Enterprise is selling its hypermarket and supermarket business, which have been hurt by China’s economic slowdown, to focus on its top-selling Snow beer. While its beer unit saw first-quarter profit surge almost nine times, underlying earnings at the retail arm fell 28 percent.

The parent’s revised offer is to “reinforce its confidence, commitment and dedication” to the company, China Resources said in the statement. The parent will also provide a loan of as much as HK$10 billion for a duration of not more than three years, it added.

Snow Beer

China Resources shares rose 8.2 percent to HK$25.80 by the close of trading in Hong Kong, the highest level since December 2013. The stock, which had been suspended for two days, has jumped 70 percent since the sale announcement on April 21.

Its parent, China Resources Holdings Co., also plans to spend as much as HK$6.15 billion to acquire a maximum of 20 percent of shares in the Hong Kong-listed company, up from 10 percent previously. It maintained the earlier offer price of H$12.70 per share.

China Resources had said the asset sale, which also includes its food and beverage units, will allow it to focus on its top-selling Snow beer, as the existing multi-business structure doesn’t reflect its full value.

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