New World China Gets Approval to Privatize, Shares Surge

  • The company gained shareholder support for privatization
  • New World will release further details of the deal soon

New World Development Co. has gained shareholders’ support for an offer to take its Chinese real estate unit private, obtaining the green-light to proceed with a deal that was last valued at HK$21.5 billion ($2.8 billion).

New World China Land Ltd. shares surged as much as 43 percent to HK$11 on Tuesday, the biggest intraday increase on record, before paring gains to HK$8.81 at 3:32 p.m. in Hong Kong. The shares will be suspended from April 6 till their eventual delisting from the Hong Kong stock exchange. Details of the impending deal and the subsidiary’s delisting will be announced later, the companies said Monday. 

The developer controlled by the family of Hong Kong billionaire Cheng Yu-tung in January offered HK$7.80 for each share of New World China, about a 26-percent premium to its stock at the time. The deal has gained the support of shareholders representing more than 97 percent of the stock on offer, both companies said in statements Monday.

New World Development is seeking to streamline operations four years after 90-year-old Cheng announced his retirement from the main business. With the latest privatization bid, it pushed ahead with a different deal structure and a higher premium to increase its chances of success.

New World’s China unit, which listed on the Hong Kong stock exchange in 1999 at HK$9.50 a share, has residential, retail, office, and hotel projects in more than 20 Chinese cities including Beijing and Shanghai, according to its website. HSBC Holdings Plc. is the financial adviser on the deal.