Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<li>Conglomerate <strong><a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group (53 HK)</a></strong> has fielded three privatisation Offers from Guoline (the Quek family) over the past twenty years. </li>
<li>Elliott Advisors, then holding 9.72% of shares out, backed the most recent Offer of HK$135/share in November 2018; but it was voted down at a Scheme Meeting. </li>
<li>Elliott has now, surprisingly, exited. This <em>may</em> open the door for a fourth Offer. Shares popped 14% on the news.  </li>
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Conglomerate Guoco Group (53 HK) has fielded three privatisation Offers from Guoline (the Quek family) over the past twenty years. 
Elliott Advisors, then holding 9.72% of shares out, backed the most recent Offer of HK$135/share in November 2018; but it was voted down at a Scheme Meeting. 
Elliott has now, surprisingly, exited. This may open the door for a fourth Offer. Shares popped 14% on the news.  


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<p>This week in StubWorld ...</p>
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<p>Following Yue Xiu's privatization Offer for <a href="https://www.smartkarma.com/entities/chong-hing-bank-ltd" target="_blank" data-smartkarma-citation="entities:344:1" rel="noopener">Chong Hing Bank (1111 HK)</a>, Hong Kong's remaining  "family"-owned banks, such as <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a> (BEA), are back in focus. <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> is trading cheap to its historical NAV discount range, and the 14.94% holding in BEA accounts for 15% of its NAV.</p>
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<p>Preceding my comments on Guoco are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Following Yue Xiu's privatization Offer for Chong Hing Bank (1111 HK), Hong Kong's remaining  "family"-owned banks, such as Bank of East Asia (23 HK) (BEA), are back in focus. Guoco Group Ltd (53 HK) is trading cheap to its historical NAV discount range, and the 14.94% holding in BEA accounts for 15% of its NAV.



Preceding my comments on Guoco are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Guoco/BEA Into Focus Post Chong Hing Bank Bid

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<p>Back on the 15 January, <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>. The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The Offer carried an acceptance condition of 90%, including Guoco's stake, which could be reduced to 50%. </p>
<p>It was a lacklustre Offer. The IFA agreed in the <a href="https://links.sgx.com/FileOpen/Revised_Offeree_Circular.ashx?App=Announcement&amp;FileID=648639" target="_blank" rel="noopener">Circular</a>, and said the Offer was not fair; but still opined it was reasonable. The Securities Investors Association (Singapore) (SIAS) <a href="https://sias.org.sg/latest-updates/letter-to-guocoleisure-holdings-limited-appeal-on-behalf-of-minority-shareholders-of-gl-limited/" target="_blank" rel="noopener">chimed in</a>, saying it thought the Offer was low-balled.</p>
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<p>Historically, Guoco have had a tendency to be frugal in their privatisation Offers. In its 2005 attempt to take GLL private back in 2005, it <em>did</em> bump its Offer to $1.25/share from S$1.20.</p>
<h3>The New News</h3>
<p>Guoco has now <a href="https://links.sgx.com/FileOpen/Dealings%20Disclosure%20and%20Revision%20of%20Offer%20Price%20Announcement.ashx?App=Announcement&amp;FileID=651983" target="_blank" rel="noopener">bumped the Offer</a> by 14.3% to S$0.80/share. The Offer consideration is final and the Offer declared unconditional in all respects.</p>
<p>Guoco has 83.4% in the bag, including its own 72.96% stake. The revised Offer terms fall outside the fair value range from the IFA, but there's probably enough here to test the 90% acceptance level, and afford Guoco the right to compulsory acquire shares. </p>
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<p>As always, more below the fold.</p>
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Back on the 15 January, Guoco Group Ltd (53 HK) made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP). The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The Offer carried an acceptance condition of 90%, including Guoco's stake, which could be reduced to 50%. 
It was a lacklustre Offer. The IFA agreed in the Circular, and said the Offer was not fair; but still opined it was reasonable. The Securities Investors Association (Singapore) (SIAS) chimed in, saying it thought the Offer was low-balled.

Historically, Guoco have had a tendency to be frugal in their privatisation Offers. In its 2005 attempt to take GLL private back in 2005, it did bump its Offer to $1.25/share from S$1.20.
The New News
Guoco has now bumped the Offer by 14.3% to S$0.80/share. The Offer consideration is final and the Offer declared unconditional in all respects.
Guoco has 83.4% in the bag, including its own 72.96% stake. The revised Offer terms fall outside the fair value range from the IFA, but there's probably enough here to test the 90% acceptance level, and afford Guoco the right to compulsory acquire shares. 

As always, more below the fold.














GL Limited: Guoco Bumps & Declares Offer Unconditional

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<p>On the 15 January, <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>. The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
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<p>This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the <a href="https://links.sgx.com/FileOpen/Revised_Offeree_Circular.ashx?App=Announcement&amp;FileID=648639" target="_blank" rel="noopener">Circular</a>, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. </p>
<p>The <a href="https://sias.org.sg/" target="_blank" data-ved="2ahUKEwjTwoy_vo7vAhXyxosBHROlAVsQFjAAegQIEhAD" rel="noopener"></a>Securities Investors Association (Singapore) (SIAS) has <a href="https://sias.org.sg/latest-updates/letter-to-guocoleisure-holdings-limited-appeal-on-behalf-of-minority-shareholders-of-gl-limited/" target="_blank" rel="noopener">joined the fray</a>, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?</p>
<p>Shares have closed at or through terms every day since the Offer was announced.</p>
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<p>As always, more below the fold.</p>
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On the 15 January, Guoco Group Ltd (53 HK) made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP). The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.


This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the Circular, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. 
The Securities Investors Association (Singapore) (SIAS) has joined the fray, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?
Shares have closed at or through terms every day since the Offer was announced.


As always, more below the fold.











SIAS Questions GL Limited's Offer: More Bark Than Bite

<p><a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> has made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>.</p>
<p>The Offer Price of S$0.70/share is a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
<p>This appears a relatively listless Offer premium, pitching GLL at a level below the COVID drop-off in Feb/March last year.</p>
<p>Of greater interest is whether this privatisation attempt is an interim step to reloading (another) take-private Offer for Guoco.</p>
<p>As always, more below the fold.</p>

Guoco Group Ltd (53 HK) has made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP).
The Offer Price of S$0.70/share is a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.
This appears a relatively listless Offer premium, pitching GLL at a level below the COVID drop-off in Feb/March last year.
Of greater interest is whether this privatisation attempt is an interim step to reloading (another) take-private Offer for Guoco.
As always, more below the fold.

GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco

Malaysia

Hong Leong Financial Group Berhad is a banking and financial services holding company. The Company provides a range of services including commercial and consumer banking, investment banking, and insurance broking. Through its subsidiaries, Hong Leong Financial underwrites life/general insurance, provides funds management, corporate advisory, and stock and share broking services.

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Hong Leong Financial (HLFG MK)

Guoco (53 HK): Fourth Time's A Charm?

I like Guoco Group (53 HK) here either as a potential privatisation play from the Quek family or simply as a deep value play.

David Blennerhassett

StubWorld: Guoco/BEA Into Focus Post Chong Hing Bank Bid

Following the privatization Offer for Chong Hing, Bank of East Asia is back in focus. Guoco is trading cheap to its historical NAV discount range,...

David Blennerhassett

GL Limited: Guoco Bumps & Declares Offer Unconditional

This will trade tight to, if not to terms. This is a done deal. If this trades a spread or two below terms, get involved. I still like Guoco here,...

David Blennerhassett

SIAS Questions GL Limited's Offer: More Bark Than Bite

The SIAS raises many valid points. GLL looks cheap and why it trades through terms. I like Guoco here, as it trades around a one-year discount to...

David Blennerhassett

GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco

Pick up Guoco here, on the expectation this take-private approach for GLL is a precursor to a new Offer being tabled, or simply on the basis Guoco...

David Blennerhassett

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