CK Asset raises share buyback by 14 per cent after asset injection from Li Ka Shing Foundation
- Company offers to buy back 380 million shares, absorbing all of the 333.3 million shares to be issued for asset purchases from Li Ka-shing Foundation
- Offer price stays at HK$51 each; company pledges to buy from market if acceptance falls below 380 million shares
The company, the city’s second-largest developer by market value, will offer to buy back 380 million shares at HK$51 each or HK$19.4 billion, according to an exchange filing late Wednesday. That is an increase from 333.3 million shares previously proposed in March.
The offer price represents an 8.3 per cent premium over its last traded price of HK$47.10 in Hong Kong on Wednesday. Once the buyback is completed, it will increase the Li family’s control from about 36 per cent to 41.3 per cent, it added.
The buyback initiative is CK Asset’s first in more than two years. Its stock peaked at HK$74.60 in February 2018. Since January last year, however, the share price has been on a general downtrend.
CK Asset said the bigger buyback was based on “feedback received from shareholders” after the group proposed in March to buy minority stakes in four UK and Dutch power and water utility companies from Li Ka Shing Foundation for HK$17 billion, payable by issuing 333.3 million new shares.
CK Asset is buying back the shares to offset potential dilution of interest held by its existing shareholders, it said. It plans to buy from the open market any shortfall tendered by investors in the buyback plan.
Shrinking its capital base would enhance “return on capital compared to the original share buyback proposal, which would be beneficial to all shareholders,” the company said.
CK Asset reported a 32.5 per cent decline in underlying profit to HK$19.34 billion last year.
Revenue from recognised property sales last year plunged 40 per cent to HK$38.7 billion. In particular, sales in Hong Kong sank 82 per cent to HK$8.9 billion. The pandemic saw the city’s economy shrink 6.1 per cent last year, the sharpest annual contraction on record.
