Monthly M&A Insider - Mergermarket

Deal of the month
Target: Tianjin Port Company Limited (56.81% stake) Announced: 16 March 2009
Bidder: Tianjin Port Development Holdings Limited Deal value: HK$14,011m
Seller: Tianjin Port (Group) Company Limited Deal nature: Recommended
• Grand Point Investment Limited has signed an agreement
to acquire a 56.81% stake in Tianjin Port Company
Limited from Tianjin Port (Group) Company Limited.
• Tianjin Port Company Limited, the listed Chinese
company, is engaged in port handling, warehousing,
cargo storage, freight forwarding and shipping brokerage.
Tianjin Port Development Holdings Ltd (TPD), the Hong
Kong listed Chinese company, is engaged in container
terminal operations. Tianjin Port (Group) Company Limited
is a China based company engaged in loading, splitting
and unloading of containers, warehousing and storage
of cargo and the provision of integrated transportation,
freight forwarding and shipping brokerage services.
Terms:
• TPD will pay a combined cash and equity consideration of
HK$10.961bn ($1.44bn).
• The consideration of HK$3.93bn ($506.97m) will be paid
in cash, and the remaining HK$7.031bn ($906.99m) by
issuing 3.362bn shares valued at HK$2.0916 per share,
representing a 51% stake in TPD.
• The offer represents a discount of approximately 14%
over Tianjin Port Company Limited’s closing share price
of CNY11.75 ($1.71) as of 13 March 2009, the last trading
day prior to the announcement of the transaction, and a
discount of 17% over its closing share price of CNY12.29
($1.79) as of 16 February 2009, one month prior to the
announcement.
• The implied equity value of the target is approximately
HK$19.294bn ($2.48bn).
Financing:
Greater China
• The acquisition will be funded through TPD’s internal
resources and bank borrowings. TPD may also issue new
shares to fund the cash portion.
Rationale:
• The acquisition will complement the container business
of TPD thereby resulting in increased scale of operations,
improved resource integration and allocation, more
centralized management and better coordination of
project planning. Upon completion, Tianjin Port Group will
hold at least a 51% stake in TPD.
Expected Completion:
• The transaction is expected to close within six months
upon fulfillment of conditions.
Conditions:
• Tianjin Port Company Limited shareholders approval.
• Completion of due diligence on Tianjin Port Company
Limited by TPD.
• Approval from SASAC, MOFCOM and CSRC.
Monthly M&A report – 55