Refinitiv Newscasts - Breakingviews TV: Defences down

Mandarin Oriental International

10/03/2021 13:30

Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_12ef37vz&referenceId=1_12ef37vz&pageId=RefinitivNewscasts
Source: Reuters

Description: Storied Asian trader Jardine Matheson is buying out its sister
company for $5.5 bln, collapsing a structure designed in the 1980s to shield
its controlling family from corporate raiders. Cheap funding and a low
valuation make this a good time to move, explains Jennifer Hughes.
Short Link: https://refini.tv/3eoAgv9

Video Transcript:

Talk about a deal for long enough and it will materialize. Storied Asian
trading house Jardine Matheson is buying out its sister company, Jardine
Strategic, for $5.5 billion. This is something that bankers and shareholders
have speculated it could happen for decades. The two have acted as dual
holding companies for the Hong Kong-based Jardines empire, which includes
Mandarin Oriental hotels and vast property portfolio and retail chains across
Asia among other units. Buying out Strategic leaves a simpler structure with
just Jardine Matheson sitting on top of the group. It also caught Strategic at
a lowest point. It had rallied from its March 2020 day trading at 6X forecast
earnings to 11X, but that's still below average. The structure was designed in
the 1980s to protect the Keswicks, Jardine's controlling family from raids by
fellow Hong Kong tycoons on their holdings. It worked. But it created
inefficiencies. Removing the second holding company will lift earnings only
slightly, but it will boost earnings per share by far more once Strategic's
holdings in Jardine Matheson has been canceled. The announcement was momentous
given the years of chatter. But nothing really changes in Jardine's operations
or holdings. That's typical of the company. It's worth $47 billion but very
much strives to keep a low profile. Hong Kong's many speculators and gossips
will just have to find another target