Billionaire Wang Seeks to Privatize Property Unit; Shares Rise

  • Deal would be latest in busy year for Wanda's Wang Jianlin
  • Wanda Commercial shares have lost 50% in less than a year

Billionaire Wang Jianlin is considering privatizing Dalian Wanda Group Co.’s property unit in Hong Kong in a deal worth at least HK$31.3 billion ($4 billion) after shares halved in value in less than a year.

The closely held group is considering an offer of HK$48 or more for each H-share in Dalian Wanda Commercial Properties Co., the real estate company said in a statement on Wednesday, 24 percent above the stock’s closing price in Hong Kong on March 30. The shares surged 21 percent to HK$47.20 in Hong Kong on Thursday.

Wanda Commercial’s shares in Hong Kong have plunged below its 2014 initial public offering price as China’s property market has been weighed down by a slowing economy. The company, which in July announced a plan to list on China’s A-share market and is awaiting regulatory approval, may have been “disheartened” by the performance of the Hong Kong-traded shares, according to a note from Credit Suisse Group AG.

“We suspect the privatization decision implies the company may consider the A-share listing, once completed, sufficient for its financing needs,” Jinsong Du, a Hong Kong-based analyst, wrote in the Credit Suisse note.

Wanda Commercial’s status as a H-share company rather than a red-chip firm means its financing activities offshore are not as flexible, Du said. H-share companies are traded in Hong Kong but incorporated in mainland China, while red chips, also traded in Hong Kong, are incorporated outside the mainland but controlled by Chinese government entities.

Property Slump

Earlier this year, Wanda Commercial’s parent group forecast overall sales will fall this year as a slump in its main real estate business overshadows gains from its burgeoning entertainment operations.

The move adds to what’s already been a busy year for Wang, whose wealth is rivaled only by Alibaba Group Holding Ltd.’s Jack Ma among Chinese tycoons. In 2015 alone, Wanda Group agreed to buy “Godzilla” producer Legendary Entertainment, invest billions in three hospitals, form a financial group, spearhead a development in India and a retail-and-leisure project in France. His Chinese cinema unit is preparing to buy assets from the parent company, and in the U.S. his AMC Entertainment Holdings Inc. is seeking to buy rival Carmike Cinemas Inc. to form the largest American movie-theater chain.

Wang may not be done. The tycoon said in mid-January that Wanda is planning five major acquisitions in 2016 -- three of them overseas.

— With assistance by Dingmin Zhang, and Bonnie Cao

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