(Yicai Global) July 10 -- COSCO Shipping Holdings Co. [SHA:601919; HK:01919] has issued a tender offer to all shareholders of Orient Overseas (International) Ltd. [HK:0316] in which it proposed to acquire a stake of at least 68.7 percent in the target company -- 430 to 626 million shares -- at USD10 (HKD78.67) per share, the Chinese state-owned shipping company announced on Hong Kong Exchanges and Clearing (HKEx) and Shanghai Stock Exchange yesterday.
If all shareholders accept the offer, it will pay HKD49 billion in total.
Orient Overseas closed 5 percent higher at HKD60 last Friday, with the acquisition premium projected at over 33 percent. In partnership with Shanghai Port Group (BVI), COSCO Shipping has proposed, via its wholly-owned overseas subsidiary, Faulkner Global, to purchase outstanding shares issued by Orient Overseas listed on the HKEx main board from all its shareholders, per the announcement. After the deal, the Chinese shipper will hold a 90.1 percent stake in the Hong Kong firm, and Shanghai Port Group will own the remaining 9.9 percent.
The acquirers will pay with cash owned or raised by Faulkner Global. A foreign subsidiary of the Bank of China has agreed to provide the latter with a bridging loan of up to USD6.5 billion. Relevant parties will sign a formal agreement on the loan,which is contingent upon the fulfillment of stated preconditions.