China Resources Enterprise Ltd. (CRE, 00291.HK) announced Tuesday that is selling all its non-beer businesses to its state-backed parent for HK$28 billion (US$3.6 billion) in a bid to improve its profitability and boost shareholder returns.
Chairman Fu Yuning said the deal represents a “strategic transformation” of the CRE into a “beer-focused company, as the leading brewer in China”, according to the Wall Street Journal.
“The share price of the company has continued to underperform the broader Hang Seng Index. Most notably, non-beer business segments of the company have been confronted by macroeconomic headwinds as well as a challenging operating environment,” CRE was quoted as saying in a statement while announcing the deal.
The non-beer businesses had total assets of HK$123.59 billion as of the end of 2014.
China Resources Enterprise will pay a special cash dividend of HK$11.50 per share, which its parent will use to pay for the assets.
The asset sale makes CRE a sole beer play, focusing on selling Snow Beer.
News of the sale of the non-beer businesses, which include supermarkets and coffee chain Pacific Coffee, sent the company’s shares up over 50 percent on Tuesday.
In late afternoon trading, they were up 55.6 percent at HK$23.65, their highest level since August 2014.
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