China's Pou Sheng gets $1.4 bln offer to go private, shares soar (updated)

POU CHEN

22/01/2018 04:38

* Taiwan parent offers 32 pct premium to take Pou Sheng 
private 
    * Pou Sheng hits highest in almost a year in Hong Kong trade 
    * Yue Yuen says to pay special dividend, shares at record 
high 
 
 (Changes date, adds stock reaction and comment from UBS 
research note) 
    By Kane Wu 
    HONG KONG, Jan 22 (Reuters) - Pou Sheng International 
(Holdings) Ltd  3813.HK  said it had got a proposal from its 
Taiwanese parent Pou Chen Corp  9904.TW  to be taken private in 
a deal valuing the firm at $1.4 billion, sending shares in the 
Chinese sportswear retailer up 31 percent. 
    Pou Sheng shareholder Yue Yuen Industrial (Holdings) Ltd 
 0551.HK  has agreed to sell its 62.41 percent stake for HK$6.8 
billion, or at a cancellation price of HK$2.03 per share, the 
Hong Kong-listed firm said in a stock exchange filing on Sunday. 
Pou Chen owns almost half of Yue Yuen. 
    The offer, which values Pou Sheng at HK$11 billion and 
reflects a premium to the stock's HK$1.54 Friday close, comes as 
traditional brick-and-mortar retailers continue to face mounting 
competition with online rivals luring buyers away. 
    Pou Sheng would need "significant investments" to transform 
its business and would have flexibility and more advantageous 
financing if it were to be taken private, according to the 
filing from the Hong Kong-listed firm. 
    The sporting goods industry "is experiencing unprecedented 
changes and challenges" from the rise of online shopping which 
has changed customers' expectations, the filing added. 
    The boards of Pou Chen and Pou Sheng believe Pou Sheng's 
listing status is ineffective in providing sufficient funds for 
the company's business and growth, the filing says. 
    For Yue Yuen, the disposal will mean it will be able to 
focus on its core manufacturing business while improving 
financial clarity and transparency, UBS said in a research note, 
lifting its share price target for Yue Yuen to HK$38 from HK$35. 
    It kept its "buy" rating for the stock. 
    Yue Yuen said it would distribute a one-off special dividend 
to its shareholders on completion of the deal, sending its 
stocks up 15.6 percent to a record high of HK$37.10.   
    Pou Sheng shares jumped to HK$2.02 apiece, the highest since 
Feb. 22, while Pou Chen shares gained 0.8 percent to T$38.95.  
    The Taiwanese footwear manufacturer will not increase the 
offer price for Pou Sheng, according to the filing. 
    Citigroup is acting as financial adviser to Pou Chen. 
    Just last year, in a deal similar to Pou Sheng's, a 
consortium led by private equity firms Hillhouse Capital Group 
and CDH Investments offered to buy out Hong Kong-listed Belle 
International Holdings Ltd in a $6.8 billion deal, as retailers 
sought new growth from e-commerce channels.  urn:newsml:reuters.com:*:nL4N1I047I 
 ($1 = 7.8199 Hong Kong dollars) 
 (1 Taiwan dollar = 0.2680 Hong Kong dollars) 
 
 (Reporting by Kane Wu and Donny Kwok; Editing by Himani Sarkar) 
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging: 
kane.wu.thomsonreuters.com@reuters.net)) 
 
Keywords: HONG KONG PRIVATIZATION/