Billionaire Li Ka-shing's Hutchison Whampoa Ltd offered to take a phone unit private for HK$4.23 billion ($545 million) in cash after the stock underperformed the Hong Kong benchmark index for three years.
Hutchison Whampoa on Friday said it would seek the 40 percent of Hutchison Telecommunications International Ltd it doesn't own for HK$2.2 a share, or 33 percent more than the stock's last price before trading was suspended on Jan 4. The phone unit's shares rose as much as 30 percent after the offer, which exceeded estimates by analysts at Credit Suisse.
Hutchison said the buyout would allow the phone company to plough cash back into expanding its operations in emerging markets including Indonesia and Vietnam.
Hong Kong's richest man, who amassed an estimated $16.2 billion expanding into everything from real estate to energy and retail, has been purchasing shares of his own companies after they trailed gains in the Hang Seng Index last year.
"This is a good deal, and unless Hutchison Telecom investors have an ultra-bullish view on the emerging-market operations, they should take the offer," said Cusson Leung, who rates Hutchison Whampoa shares "outperform" at Credit Suisse in Hong Kong.
Hutchison Telecom shares rose 28 percent to close at HK$2.12 in Hong Kong on the resumption of trading after the stock was suspended Jan 4 pending Friday's announcement. Hutchison Whampoa shares were unchanged at HK$56.6 after the offer.
"There will be no surplus cash available for dividends" as Hutchison Telecom focuses on boosting investments in its operations in Indonesia and Vietnam, Hutchison Whampoa said in Friday's statement. The unit "has the benefit of cash-flow generative businesses" following the asset disposals in India and Israel, it said.
Li raised his investment in Hutchison Telecom in December 2007 by buying out Egypt's Orascom Telecom Holding SAE, the company's second-biggest investor at the time.
Li is dubbed "Superman" by Hong Kong's media because of his track record for investing. He correctly predicted in 2007 that China's stock market was in a "bubble." His assets were estimated to be worth $16.2 billion by a Forbes magazine survey.
The billionaire on Thursday said investors should look for more proof the recession has given way to economic growth before buying into stocks, saying share prices had "run ahead of economic fundamentals".
