Amadeusz Juskowiak

Hk hotels soars on takeover speculation

The price of Hongkong and Shanghai Hotels Ltd SHLHHKs stock soared on speculation of a takeover battle between major shareholders the Kadoorie family and the Evergo Industrial Enterprise Ltd EVGHHK group stock brokers said

They noted heavy buying in Hk Hotel shares after an announcement by Evergos China Entertainment and Land Investment Co Ltd unit that it bought about 20 pct of Hk Hotels from the firms deputy chairman David Liang for 106 billion dlrs The stock rose 12 HK Dlrs to 62 dlrs today

Thomas Lau Evergos executive director declined comment on whether the group is seeking a further stake in Hk Hotels But he told Reuters the group will hold the 20 pct stake bought from Liang as long term investment

He said Evergo was attracted by the underlying strength of Hk Hotels

Analysts said Evergo may be looking for a possible redevelopment of the Peninsula Hotel one of Asias best known hotels and another site on Hong Kong island Both are owned by Hk Hotels

Lai Sun Garment Co ltd yesterday said it acquired a 10 pct stake in Hk Hotels from Liang for 530 mln dlrs

Lau denied any link between China Entertainment and Lai Sun on their acquisitions of the Hk Hotels stake

It is purely coincidence he said

But analysts were not so certain saying that the Evergo group which has a reputation as a corporate raider may team up with Lai Sun Garment for a takeover

Lau also denied any contact with the Kadoorie family which analysts estimate has more than 20 pct of Hk Hotels Michael Kadoorie is chairman of Hk Hotels

Lau said two representatives of Evergo will be nominated to the Hk Hotels board

A source close to the Kadoorie family said the family has not considered any countermoves so far

Analysts said it would be difficult for Evergo and the Kadoorie family to cooperate because of different management styles

Evergo may want to split up the hotel management and property developments of Hk Hotels but that strategy may not fit the conservative Kadoorie family said an analyst who asked not to be named

Another analyst noted the price of Hk Hotels had been distorted by the takeover talks because its net asset value is only worth about 50 dlrs a share The offers by Evergo and Lai Sun were for 53 dlrs a share though that is well below the current trading price

Trading was suspended today in shares of Lai Sun Evergo China Entertainment and the groups associate Chinese Estates Ltd

Chinese Estates lost 25 cents to 2015 dlrs yesterday China Entertainment five to 860 dlrs and Evergo one to 74 cents Lai Sun gained 50 cents to 7050 dlrs