Billionaire Wang Wins Glass Lewis Backing for Wanda BuyoutBy
Glass Lewis says $4.4 billion buyout is ‘fair and reasonable’
Wanda Commercial shareholder meeting to be held on Aug. 15
Billionaire Wang Jianlin’s $4.4 billion plan to buy out his Dalian Wanda Commercial Properties Co. unit drew support from influential proxy advisory firm Glass Lewis & Co., increasing the likelihood that investors will approve Hong Kong’s biggest-ever privatization deal next month.
“The financial terms of the offer are ultimately fair and reasonable for independent shareholders," Glass Lewis said in a report seen by Bloomberg. The HK$52.80-a-share bid is the best option for minority public shareholders amid the challenging conditions in the Chinese economy and property market, according to the report.
The endorsement comes days after China Life Insurance Co., the biggest holder of Wanda Commercial’s listed stock, said it would vote in favor of the transaction. Shares of the property developer have been trading below HK$50 after the asset management arm of APG Groep NV earlier this year balked at the bid as being too low and as data compiled by Bloomberg showed investors such as BlackRock Inc. would stand to lose money if the deal went through.
Glass Lewis’s backing matters as it provides vote recommendations to more than 1,200 clients who collectively manage more than $25 trillion in assets. It’s one of two major global proxy advisory firms providing such services. The other is Institutional Shareholder Services Inc., which is planning to issue its verdict in the coming days ahead of the Aug. 15 shareholder vote.
Wanda Commercial, a unit of Wang’s flagship Dalian Wanda Group Co., climbed as much as 1.8 percent in Hong Kong trading after the Glass Lewis endorsement was reported Wednesday. The shares had been underperforming the Hang Seng Index since late June after APG fueled concern that investors would shoot down the deal.
Wang has said the property unit, which trades in Hong Kong at about 9.7 times estimated earnings, is undervalued and should be privatized as a precursor to relisting the stock in exchanges in mainland China, where companies then to fetch higher valuations.
The offer still isn’t a done deal. Opponents of the proposal only need 10 percent of votes cast to kill it, while supporters need more than 75 percent for approval under the terms. If the plan is turned down, Wang won’t be able to try again for 12 months, under rules governing such sales. Investors including a unit of Ping An Insurance (Group) Co. have already lined up to fund the deal.
Wang and Wanda Group control the property unit through holdings in Wanda Commercial’s unlisted shares in mainland China. The shares in Hong Kong are listed but they only account for 14 percent of the outstanding stock. Of the listed shares, about half are owned by 11 minority shareholders, who mostly bought in when the company went public. They include Kuwait Investment Authority and Och-Ziff Capital Management Group LLC.