CWT jumps after China bid

Keppel Container Terminal in Singapore

China’s HNA Holding Group has announced it would make an offer to acquire Singapore-listed logistics firm CWT for nearly S$1.4 billion (US$994 million), prompting CWT shares to bounce by 10 per cent. 

The Chinese conglomerate reported in a filing to the Hong Kong Stock Exchange that its subsidiary HNA Belt and Road Investments in Singapore would offer to purchase 600 million CWT shares at S$2.33, valuing the deal at S$1.4 billion.

HNA is expanding rapidly and now spans aviation and financial services, with many assets overseas.

CWT, incorporated in 1970 as a private arm of the Singaporean port operator PSA, offers logistics services, commodity marketing, financial and engineering services.

It has operations in 90 countries and was listed on the Singapore Exchange in 1993.

CWT’s major shareholders, including C&P Holdings and Loi Kai Meng among others, hold 65.13 per cent of the firm. If 90 per cent of CWT shareholders accept the offer, it will become compulsory.

Preconditions for the deal include approval by Singapore’s anti-monopoly body and support by HNA shareholders.

The offer represents a 13.1-per-cent premium over CWT’s last traded price of S$2.06 on Wednesday. HNA said in the filing that it intended to maintain CWT’s management.

It said the acquisition would help it to leverage its international platform, become a leading logistics player and diversify its property portfolio.

With this latest move, China’s HNA group, which started as a domestic airline, has now stuck more than US$40 billion in deals in less than two years.

HNA in March reported a net loss for last year of HK$21.9 million (US$2.8 million) – its sixth consecutive year of losses – after erratic weather and tough competition hammered its golf and hotel revenues at the Dongguan Hillview Golf Club.

The deal will also help the group step into commodity trading and take advantage of Beijing’s “One Belt, One Road” trade scheme, which aims to build road and energy projects through 60 Asian and European countries to promote trade and transport development.

“The group seeks merger and acquisition targets in sectors including logistics, real estate, logistics warehousing, bulk commodity trading, logistics finance and logistics transport facilities while closely monitoring the economic and trade development situation in the ‘One Belt, One Road’ initiative, Southeast Asia and other regions,” HNA announced in the filing.

Picture credit: Wikimedia