Li Ka-shing announced a fundamental restructuring of his corporate empire Friday.
His flagship, Cheung Kong Holdings Ltd. (00001.HK), will offer US$24 billion in stock to take private its Hutchison Whampoa Ltd. (00013.HK) unit.
Investors in Cheung Kong will swap their shares in the developer for stakes in a new holding company called CK Hutchison Holdings Ltd., the firm said in a stock exchange filing.
CK Hutchison will then issue new shares to buy out minority owners of Hutchison Whampoa, a conglomerate that spans the ports, retail and telecommunications sectors in dozens of countries.
The reorganization will end Hutchison Whampoa’s 37-year history as a separate listed company, which Li kept after he became the first Chinese to control a British colonial conglomerate in 1979, Bloomberg reported.
CK Hutchison will spin off the group’s combined property business, to be called Cheung Kong Property Holdings Ltd., and list it separately on the Hong Kong stock exchange, the filing said.
The streamlined business paves the way for Li to hand Cheung Kong over to his elder son, Victor Li Tzar-kuoi, the company’s deputy chairman, the report said.
“As a person reaching a certain age, you want the company’s successor and all the executives here to more easily operate and to do well, so it’s not a surprise,” Li said at a new conference.
“I want the company to do well not only today but also in the future. That’s my responsibility.”
CK Hutchison will offer Hutchison Whampoa shareholders 0.684 CK Hutchison share for every Hutchison share, the filing said.
The deal values Hutchison Whampoa at HK$88.28 a share, a 1 percent premium to its last close and a 6.4 percent discount to its average close over the past three months, Bloomberg calculated.
The reorganization is good for both companies and reflects their real value, Li, 86, said. He will chair both companies.
Li said he hopes to increase the dividend payout this year.
Cheung Kong shares fell 0.6 percent to HK$124.80 at the close of trading Friday, while Hutchison Whampoa gained 0.9 percent to HK$87.40. The benchmark Hang Seng Index rose 0.4 percent.
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