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Matthew Brooker

In This Bermuda Triangle, It’s Value That Goes Missing

Jardines, the storied Asian conglomerate, takes minority investors on a magical mystery tour through the gaps in transnational governance.

Bermuda trumps London, Singapore and Hong Kong.

Bermuda trumps London, Singapore and Hong Kong.

Photographer: Bettmann/Bettmann

Jardine Matheson Holdings Ltd.’s $5.5 billion buyout of its biggest unit has driven up the shares of both companies and unwound a structure that has long been the target of corporate governance critics. Not everyone is satisfied, though. Minority shareholders of Jardine Strategic Holdings Ltd. contend the terms of the deal are unfair to them, with the offer price representing a 43% discount to the company’s own assessed net asset value at the end of December 2020. They're right to be unhappy.

In its circular on the deal last week, the Hong Kong-based conglomerate focused on the premium to the market price: The $33 per share offer is 20% more than Jardine Strategic’s closing price on March 5, the last business day before the proposal was made public, and 47% more than the stock’s volume-weighted average price over the prior 12 months, a period that encompasses the pandemic slump. That looks pretty good, until you consider Jardine Strategic’s estimate of its net asset value at the end of 2020. In its preliminary annual results on March 11, the company put this figure at $58.22 per share, fully $25 above the offer price. The shareholders’ circular makes no reference to the NAV discount.