SINGAPORE: Shares in Singapore logistics company CWT soared more than 9% Monday in response to a takeover offer from Chinese conglomerate HNA Group.
HNA Holding Group, a Hong Kong-listed unit of the Hainan Island-based group, announced on Sunday a “pre-conditional” offer to pay 2.33 Singapore dollars per CWT share, or S$1.4 billion ($1 billion) in total. That represents a premium of 13% over the last-traded price Thursday on the Singapore Exchange. Trading in CWT was halted at the company’s request from Thursday afternoon through Friday.
On Monday, the shares surged at the open, hitting an intraday high of S$2.28 before closing at S$2.26, 9.2% higher than the pre-announcement price.
The offer price is “fair,” said Eugene Chua, an equity analyst at OCBC Investment Research. “We think shareholders should take up the offer.”
HNA’s proposal has been backed by the Loi family, who together hold 65.13% of CWT shares.
CWT is Singapore’s leading operator of logistics services, including warehousing, freight forwarding and supply chain management. It also is known as a commodity trader, focusing on base metals and energy products. The company has operations in more than 90 countries. HNA has been in exclusive acquisition talks with CWT since May 2016.
HNA needs to get the green light from anti-monopoly bodies in China and other regions where CWT operates before the Chinese group can make a formal takeover offer. HNA has given itself five months to clear these preconditions.
In the offer announcement submitted to the Stock Exchange of Hong Kong, HNA said that “as part of its development strategy, [the group] mainly focuses on merger and acquisition opportunities in international markets.” Logistics is one of its main business areas, in addition to air transport, finance, retail, tourism and real estate.
The company said in the document that it specifically seeks “targets in sectors including logistics real estate, logistics warehousing, bulk commodity trading, logistics finance and logistics transport facilities while closely monitoring the economic and trade development situation in the One Belt, One Road initiative, Southeast Asia, and other regions,” referring to Chinese President Xi Jinping’s ambitious economic development strategy covering China, Southeast Asia, South Asia, Africa and Europe.
The owner of Hainan Airlines has been in the limelight amid a string of overseas acquisitions. The group spent over $26 billion in 2016 on 21 M&A deals, including a $6 billion acquisition of U.S. technology distributor Ingram Micro.
