Original title: The stock price once plummeted by 40%, where will SOHO China go after the termination of the tender offer
On September 13, affected by the termination of the acquisition by the Blackstone Group, SOHO China once plunged 40% at the opening of the market, to HK$2.1. As of the noon close, its stock price had fallen 34.86% to HK$2.28 per share, leading the decline in the Hong Kong real estate sector.
The relationship between SOHO China’s return and stock price is like a function with a particularly strong amplitude. As the most effective variable, “mergers and acquisitions” drive the ups and downs of the curve within a short period of time.
Ups and downs in stock prices
After the trading on September 10, SOHO China issued an announcement stating that in view of the insufficient progress in meeting the prerequisites of the takeover offer, all parties agreed that the prerequisites could not be met on or before the final deadline of the offer. With the unanimous consent of all parties, the Blackstone Group terminated A takeover offer for the company.
SOHO China opened at HK$2.98/share on the 13th. After the opening, the stock price dropped sharply, with a minimum drop of 40% to HK$2.1/share.
In an investor exchange community, many investors expressed feelings about “how to go up and how to go down”, and some people pointed out that “not once or twice, every time it rises sharply, it means that it is going to be sold. If it drops sharply, the other party does not buy it.”
Spreading out SOHO China’s K-line chart, it can be found that the recent stock price changes are related to rumors of mergers and acquisitions.
As early as March 10, 2020, there was news about Pan Shiyi’s overall sale of SOHO China. It was reported that the Blackstone Group was negotiating with SOHO China, and the transaction value might be US$4 billion.
Affected by the news, SOHO China’s stock price soared by nearly 40% that day, with the highest price being 4.17 Hong Kong dollars per share, a 52-week high.
SOHO China issued an announcement on the next day, saying that it is indeed discussing the possibility of implementing strategic cooperation with overseas financial investors and has not yet made a decision on whether to conduct a potential transaction.
But this negotiation eventually ran aground. Five months later, on August 13, SOHO China officially announced that discussions on the potential transaction had ended because the terms did not reach a consensus.
SOHO China’s share price has since fallen all the way, and reached the bottom of 2 Hong Kong dollars per share on September 25, 2020.
The stock price ushered in a noticeable improvement date on November 13, 2020. On that day, it was reported that Hillhouse Capital and SOHO China had conducted preliminary negotiations to privatize it. The transaction value may exceed 2 billion US dollars.
On that day, SOHO China’s stock price rose again by more than 40% to 3.22 Hong Kong dollars.
However, the clarification of the second merger and acquisition rumors came quickly, and Hillhouse Capital responded that day, saying that it had no intention of privatizing SOHO China. Subsequently, SOHO China’s stock price quickly narrowed, and finally closed at 2.45 Hong Kong dollars, the increase dropped to 6.99%.
Time has come for SOHO China’s third merger and acquisition dynamic. On June 16, 2021, SOHO China issued an announcement stating that Blackstone has issued a comprehensive takeover offer at a purchase price of HK$5 per share, and the highest payment consideration is HK$23.658 billion. After the transaction is completed, Blackstone will become the controlling shareholder and largest shareholder of SOHO China. SOHO China will continue to be listed on the Hong Kong Stock Exchange. The board of directors nominates a new executive director.
Highly related to this is that SOHO China’s stock price rose 55.1% from June 4th to 11th in the 6 consecutive trading days before the announcement of the short-term trading halt for this acquisition. On June 17th after the news was announced, SOHO China’s share price rose to 4.78 Hong Kong dollars per share. The cumulative increase from June 4th to June 17th exceeded 90%.
This transaction, which had already been put on the table, was called “Pan Shiyi’s Last Retreat”, but it was still broken after all.
In fact, as early as July 29, the information that SOHO China’s acquisition may be blocked has flowed out. On the news, some media reported that the sale of SOHO China to the Blackstone Group was facing regulatory obstacles related to the founder. The stock price plummeted over 30% at the opening of the day to 2.9 Hong Kong dollars per share, and closed at 19.89%.
Huang Lichong, president of Huisheng International Capital, analyzed to a reporter from 21st Century Business Herald that as the market has expectations of a full-scale takeover offer, the stock price will be traded around the purchase price (HK$5/share), and there will be a sharp increase, but now the purchase transaction After the cancellation, the stock price should fall back to its original price.
“Unless new big news comes out in the future, this will continue to be the case,” Huang Lichong said.
Where is the future
How will Pan Shiyi deal with SOHO China after the comprehensive acquisition offer with the Blackstone Group fails? Will there be new buyers coming?
Regarding the reasons for the termination of the offer, Bai Wenxi, chief economist of IPG China, believes: “The reason for the termination was mainly related to anti-monopoly review, and this review has been inconclusive. As a result, Blackstone’s tender offer for SOHO China exceeded the agreed period of time. In essence, it was mainly due to the unclear attitude of the regulator, which led to Blackstone’s lack of confidence in the project’s prospects and gave up the acquisition, otherwise the two parties can continue to extend the offer time.”
Bai Wenxi told reporters of 21st Century Business Herald that the unfinished transaction between the two parties would be a big bad news for SOHO China and its actual controller Pan Shiyi and his wife.
Regarding the future of SOHO China, Bo Wenxi is worried. He believes that in the current state, it is difficult for SOHO China to find someone to take over. It is highly likely that it can only continue to operate or sell properties, and SOHO China’s listing status is not necessary to continue to be maintained. Delisting is also a high probability.
“The listing platform is only useful for development companies that require continuous financing and high turnover. A pure “charter company” such as SOHO China does not require continuous financing but has to waste the various costs of maintaining the listed platform and bear the burden of market investors. Performance pressure is indeed very unworthy and uneconomical.” Bo Wenxi said.
When analyzing SOHO China’s future direction, Huang Lichong said: “A single property may be sold overseas to some other listing platforms, and then the funds may be invested in overseas properties. It is also possible to distribute dividends and cash out part of the funds.” He analyzed that, The actions of Pan Shiyi and Zhang Xin’s family in recent years have shown their determination to cash out, and continuing to reduce their holdings is a high probability event.
(Author: Kong Haili Editor: Li Qingyu)
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