HONG KONG: Shares of Gome Electrical Appliances Holding Ltd sank 13 percent to HK$1.27 (16 US cents) in Hong Kong after it unveiled a plan to take over unlisted assets to streamline management structure.
The Hang Seng Index itself slumped 3.09 percent.
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Home appliance retailer Gome Electrical Appliances said it would buy retail assets from its controlling shareholder to expand its retail network.
Gome said it had agreed to pay Artway Development Ltd, which is owned by Gome’s founder Huang Guangyu, HK$11.3 billion by issuing 6.2 billion new shares and warrants, which can be converted into 2.5 billion new shares within two years.
Huang’s stake in Gome will go up to 55.34 percent on completion of the deal and exercise of all the warrants, up from the current 32.43 percent, according to a filing to the Hong Kong stock exchange. The deal is subject to regulatory approval.
Under the deal, Gome will acquire altogether 578 stores in 181 Chinese cities. The purchase will bring the number of retail stores it owns to 1,714 on China’s mainland.
