(Bloomberg) — This year is poised to be the busiest in nearly a decade for takeover deals involving a range of Hong Kong-listed companies, from skin-care brands to warehouse operators. Allied to that has been an uptick in bidding wars as some firms jostle for assets.
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China Mobile Ltd.’s pursuit of broadband provider HKBN Ltd. is likely to face competition from US private equity firm I Squared Capital, Bloomberg News reported Wednesday. Greatview Aseptic Packaging Co. Chairman Jeff Bi is in talks with Chinese investor Cloudview Capital about a joint buyout bid to rival one from Shandong Newjf Technology Packaging Co.
At $38 billion, the volume of mergers and acquisitions targeting Hong Kong-listed firms is the highest since 2017, according to data compiled by Bloomberg. Deals include the creation of China’s biggest brokerage through the combination of Guotai Junan Securities Co. and smaller rival Haitong Securities Co.
Another battle in the spotlight involved packaging company CPMC Holdings Ltd., whose minority shareholder ORG Technology Co. competed with China Baowu Steel Group Corp. and China Reform Investment Co. in bidding for the firm. While CPMC’s largest shareholder Cofco Corp. accepted the state-backed consortium’s offer, it fell short of shareholder support and lapsed in September, potentially paving the way for ORG.
“Regardless of the winner, if these transactions progress smoothly and the Hong Kong Takeover Code is seen to work well, we can expect to see further opportunistic approaches to public shareholders,” said Simon Kavanagh, a partner at investment bank BDA Partners.
The trend would be a welcome catalyst for the local stock market, added Kavanagh, who also heads BDA’s Hong Kong office and industrials practice.
Hong Kong’s benchmark Hang Seng Index is on track for its first annual gain since 2019, rising more than 18% so far this year, boosted by a sharp rally in September.
Despite the recent uplift, Kavanagh said, the Hang Seng Index is still trading at half the price earnings ratio of the S&P 500 Index, so there is value to be found on the Hong Kong marke.
Another busy area of deals has come from controlling shareholders taking companies private as they traded at a discount to elsewhere.
L’Occitane International SA’s billionaire owner Reinold Geiger took the skin-care company private in a $6.4 billion deal, ending its 14-year run on the Hong Kong stock exchange. Just this month, a group of investors made a $7 billion binding offer for Hong Kong-listed logistics real estate firm ESR Group Ltd.
