Hong Kong’s Fung family, GLP Group offer to privatise global supply chain manager Li & Fung at 150 per cent premium
- The Fung family’s offer is worth HK$7.2 billion
- It has teamed up with Singapore’s GLP Group, which will buy all shares the family does not currently own
Hong Kong’s Fung family and Singapore’s GLP Group have made a HK$7.2 billion (US$928 million) offer to privatise 114-year-old global merchandise supply chain manager Li & Fung at a price premium of 150 per cent, as they seek to take advantage of the worst economic and stock market downturn in a decade caused by the coronavirus pandemic.
Golden Lincoln, controlled by Victor Fung Kwok-king and William Fung Kwok-lun, has teamed up with GLP, a global operator and investor in logistics, real estate, infrastructure and finance, for the privatisation. GLP will buy all the 5.78 billion shares not owned by the Fung family at HK$1.25 each. The family will not be buying any more Li & Fung shares.
“In light of global economic uncertainties, the company’s transformation will involve execution risk and the associated benefits will require a longer time to materialise,” chief executive Spencer Fung, who is also Victor Fung’s son, said in a filing to the Hong Kong stock exchange after market close on Friday. “The offerers believes that the transformation of the company will be more effectively implemented away from the public equity markets.”
This is because the privatised company will no longer be under pressure from independent shareholders to pursue short-term goals, which might not be in line with its long-term restructuring plan, which will also need additional funding to be realised, a source close to the deal told the South China Morning Post.
Spencer Fung said the Li & Fung board had established an independent committee to make a recommendation to independent shareholders on the offer.
After the privatisation, the Fung family will retain management control of Li & Fung by owning 60 per cent of the voting shares, said Ed Lam, Li & Fung’s chief financial officer. GLP will own 40 per cent of the voting shares and 100 per cent of the non-voting shares, resulting in an “effective economic ownership” of 67.67 per cent.
