Wuzhou Jumps After Brother of Sunac's Sun Said to Buy Stake

Updated on
  • Chairman, CEO of Wuzhou sell stake in the Chinese mall builder
  • Shares had been suspended after record 32% plunge on Nov. 9

Wuzhou International Holdings Ltd. shares surged by the most in more than two years after the chairman and chief executive officer of the Chinese mall builder sold a stake to the brother of developer Sunac China Holdings Ltd.’s chairman, according to two people familiar with the matter.

Wuzhou jumped as much as 33 percent in Hong Kong trading, the most since June 13, 2013, and was up 21 percent at HK$0.85 by the noon break. The stock resumed trading Friday after it was suspended following a record 32 percent plunge on Nov. 9.

Boom Win Holdings Ltd., owned by Chairman Shu Cecheng and Chief Executive Officer Shu Cewan, agreed to sell a 19 percent stake in Wuzhou for HK$320 million ($41 million). The sale of 936.4 million Wuzhou shares at about HK$0.34 apiece was made to Sun Hong Bing, a Hong Kong resident born in Shanxi province, the company said in a filing to the stock exchange on Thursday. The buyer is Sunac Chairman Sun Hongbin’s younger brother, according to two people with knowledge of the matter who declined to be named as the relationship isn’t disclosed publicly.

There “might be synergies” between Wuzhou and Yurun Holdings Group Co., a meat producer with diversified operations including commercial real estate, that Sunac’s Sun Hongbin is in talks to buy, according to Lucror Analytics.

Sunac, which dropped a takeover bid for Kaisa Group Holdings Ltd. earlier this year, called off talks to form a partnership with indebted Yurun in September and said it will let its chairman try to cut a deal instead.

‘Third Party’

The buyer is an “independent third party” to Wuzhou and people connected to it, according to the statement. Boom Win will continue to hold a 51.14 percent stake in the company after the transaction is completed, it said. The price is a 51 percent discount to its last traded level.

The company disclosed Nov. 10 that the shares were halted pending an announcement in relation to a share transfer, with Shu, the chairman, saying later the same day that the transfer was among family members.

"Some changes happened during the discussion,” Shu said by phone on Thursday. “I didn’t reach agreement with my brothers."

Fitch Ratings in September cut Wuzhou to B- from B, citing its low margins and debt level. Moody’s Investors Service said Nov. 11 that it’s reviewing the builder’s rating for a possible downgrade as the stake transfer may potentially impact the company’s daily operations or its ability to improve its credit metrics. Wuzhou shares have declined 42 percent this year.

More than 119 million shares of Wuzhou changed hands amid the stock’s tumble on Nov. 9, the highest volume since June, with most of the price drop coming in the final 30 minutes of trading.

“The Board confirms that it is not aware of any reason for such fluctuation in
price and trading,” Wuzhou said in its statement on Thursday.

— With assistance by Moxy Ying, Dingmin Zhang, and Emma Dong

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