Wanda’s $4.4 Billion Buyout Proposal Wins Support From ISS

Updated on
  • Endorsement follows favorable recommendation from Glass Lewis
  • Proxy-adviser support adds momentum to Wang Jianlin’s effort

Institutional Shareholder Services Inc. recommended shareholders support Wang Jianlin’s $4.4 billion buyout plan for Dalian Wanda Commercial Properties Co., adding momentum to the billionaire’s campaign for Hong Kong’s biggest-ever privatization deal.

The influential shareholder advisory firm’s endorsement, dated Aug. 1, comes days after rival Glass Lewis & Co. gave the same recommendation. China Life Insurance Co. and Kuwait Investment Authority, the two biggest holders of Wanda Commercial’s listed shares, last month said they would vote in favor of the deal.

Wanda’s property unit has lost about 36 percent of its market value from its peak in June last year amid signs that a glut of commercial properties and slower growth in China’s economy are crimping growth.

“The offer appears opportunistic,” ISS said in the report, e-mailed to Bloomberg.

Shares of the property developer have declined since the management arm of APG Groep NV earlier this year said the bid was too low. Some investors, including BlackRock Inc., would stand to lose money if the deal gets approved because they bought shares at a higher price, on average, than Wang’s offer, according to data compiled by Bloomberg.

The stock was untraded Tuesday in Hong Kong, where markets morning trading was canceled because of a typhoon.

A shareholders vote on the proposal is scheduled for Aug. 15. Under its terms, approval requires 75 percent of votes, while rejection needs only 10 percent. If the transaction is rejected, Wanda won’t be able to try again for 12 months.

Most of Wanda Commercial’s shares are unlisted and controlled by Wang and his flagship firm Dalian Wanda Group. About 14 percent of the stock is listed in Hong Kong. Of the listed shares, half belong to 11 shareholders including Och-Ziff Capital Management Group LLC.

Wang’s proposed transaction would be the biggest going-private deal on the Hong Kong stock exchange, overtaking Alibaba Group Holding Ltd. $2.5 billion deal in 2012 to take its Hong Kong-listed unit private.