China Life Endorses Wanda Commercial’s $4.4 Billion Buyout Bid

Billionaire Wang Jianlin clinched the endorsement of China’s biggest insurer on his plans to buy out all outstanding Hong Kong-listed shares in his property unit for $4.4 billion, gaining a key ally with less than a month to go before the deal goes to a vote.

China Life Insurance Co. has provided a letter of intent in favor of the privatization plan, Dalian Wanda Commercial Properties Co. said in a statement on Monday in Hong Kong. China Life, which bought in Wanda Commercial shares when the firm went public in late 2014, owns a 7.4 percent stake and is the biggest holder of the listed shares.

The endorsement is a vote of confidence for Wang, who’s seeking to privatize Wanda Commercial to eventually relist the company in mainland China, where the company may fetch higher valuations. The property developer has been trading below HK$50 a share after the asset-management arm of APG Groep NV earlier this year voiced concerns about the offer being too low.

Still, Wang will need more investors as the deal needs at least 75 percent of shareholders in the Hong Kong-listed unit to vote in favor of it to go through. If even 10 percent of Wanda Commercial shareholders oppose the offer, the transaction will collapse.

Under the privatization plan, the largest in Hong Kong if it goes through, Wang is leading a group that’s offering HK$52.80 for each Hong Kong-traded share of Wanda Commercial, or 10 percent more than the the stock’s initial public offering price. Wanda shareholders are scheduled to vote on the proposal on Aug. 15.

Only about 14 percent of the outstanding Wanda Commercial’s shares are listed in Hong Kong and the rest are unlisted in mainland China, controlled by Wang and his flagship Dalian Wanda Group Co. Of the listed shares, about half are owned by 11 minority shareholders, who mostly bought at IPO price. They include Kuwait Investment Authority and Och-Ziff Capital Management Group LLC.

Before it's here, it's on the Bloomberg Terminal.