By Rishav Chatterjee
(Reuters) -China’s Fosun Tourism is proposing to buy back the shares not owned by its controlling shareholder, in a bid to take itself private and address concerns about the limited liquidity of its stock.
Under the deal, Fosun Tourism will buy back the outstanding shares at HK$7.80 apiece, a 95% premium to their last close, the travel and leisure company said on Tuesday. It will end up being owned by its controlling shareholder, conglomerate Fosun International and get de-listed.
The conglomerate has an over 78% stake in Fosun Tourism and the deal values the latter at HK$9.71 billion ($1.25 billion). The travel operator’s other controlling
Trading in Fosun Tourism’s shares has been halted since late November due to a pending takeover-related announcement. They are expected to resume trading on Wednesday.
The parent company has been grappling with high debt and was looking to sell luxury resort Atlantis in southern China, Reuters reported in March.
The Fosun Group’s total debt was 222.31 billion yuan ($30.65 billion) at the end of June.
The buyout offer comes at a time when Fosun, once known as one of China’s most acquisition-hungry conglomerates, seems willing to roll back its presence in the tourism sector.
Fosun Tourism’s other main asset is Club Med and sources have said that the conglomerate is exploring the sale of a minority stake in the French travel and tourism operator.
Fosun Tourism accounts for 9% of Fosun International’s overall revenue, with the conglomerate’s other businesses spanning healthcare, financial services and real estate.
Fosun Tourism’s shares are currently at a multi-year low and Smartkarma analyst David Blennerhassett had predicted a hefty premium for any takeover deal after the stock’s trading halt.
“100% premium is not unrealistic,” Blennerhassett had said in a note, adding that Fosun Tourism stock was illiquid.
If the deal goes through, Fosun Tourism will be 98.44% owned by Fosun International and 1.56% by Fosun Holdings, another firm under the broader group.
Fosun International Holdings currently has a 1.24% stake in the tourism company, according to LSEG data.
S&P Global said in a report in May last year that Fosun could continue to rely on asset sales and domestic banking support to reduce its debt burden.
($1 = 7.7761 Hong Kong dollars)
($1 = 7.2538 Chinese yuan renminbi)
(Reporting by Rishav Chatterjee in Bengaluru. Editing by Shounak Dasgupta and Mark Potter)
