The veteran Hong Kong-owned apparel stock Giordano (0709) has recently received a voluntary conditional general offer from the major shareholder Cheng Jiachun's family.
The market originally thought that the Zheng family intends to privatize Giordano, but the "difficulty" of the proposed plan this time has been greatly reduced, and the company's listing status will be retained. The action is only to increase its shareholding from less than 30% to more than 50%.
This move is obviously to strengthen the holding, but what is interesting is that the market has been speculating that the Zheng family and the friendly "stocking" have already firmly controlled Giordano, why is it "excessive"?
Analysts believe that becoming a holding company has the advantage of being able to attack, retreat and defend.
Although the plan is voluntary, dissatisfied retail investors can "not sell one share", but the company's second largest shareholder and independent stock analyst David Webb, when interviewed by "Hong Kong 01", criticized the price for being too low, and believed that the company's management had the responsibility to invite Other potential buyers bid.
Giordano has recently received a voluntary conditional general offer from the major shareholder Cheng Jiachun's family through its subsidiary Chow Tai Fook Holdings.
(file picture)
In the middle of last month (June 23), Giordano announced that it had received an offer from the major shareholder Zheng's family through its Chow Tai Fook Holdings (hereinafter referred to as "Chow Tai Fook"). The premium is 32%, and the capital involved is up to 2.556 billion yuan (funds for the acquisition of all "street goods" together with stock options).
Different from the private plan that requires the approval of other shareholders to be successful, Chow Tai Fook's latest offer arrangement is relatively low in "difficulty". The condition is that through this offer, major shareholders can increase their stake to 50% or more, otherwise the offer will fail. .
Taking into account the "friendly" shareholding material offer plan passed extremely high
According to the information of the Hong Kong Stock Exchange, Chow Tai Fook currently holds about 24.57% of the shares in Giordano, making it the largest shareholder. David Webb holds 5% of the shares, followed by the management with 1.79% of the shares.
Since the company's fund shareholders, such as BlackRock and Pilot, do not hold much shares, "street goods" approach 70%.
Although the offer price has a premium, it is still "diving" a lot compared to Giordano's high of 5.35 yuan a few years ago, so there is still a question mark on how many shareholders are willing to sell their shares.
But in reality, Chow Tai Fook's chances of "buying enough" are very high.
Pure counting, it needs the approval of shareholders holding about 25.43% of the shares to receive more than 50% of the stock, but it is by no means starting from zero.
The financial advisor for Chow Tai Fook’s offer this time is Kaisheng Capital. After checking CCASS’s holdings, Kaisheng Securities, a subsidiary of Kaisheng Capital, currently holds about 19.1% of Giordano, and the position has increased over the years. ”, it is expected that the actual controller of this position has a high chance of accepting a takeover.
In other words, taking into account the capital position of Kaisheng, Chow Tai Fook only needs to acquire an additional 6.33% of "street goods" to reach the target.
David Webb criticized Chow Tai Fook's low shot and called on other shareholders to reject the acquisition.
(file picture)
Webb appeals against: management should find other potential buyers
The only "concealed concern" may be the appeal of the second-largest major shareholder, David Webb.
As a matter of fact, on the day following the announcement of the plan, he criticized Chow Tai Fook's low price on Twitter in a high-profile manner, calling on other shareholders to reject the takeover.
A reporter from Hong Kong 01 called David Webb to get his thoughts on the deal.
Webb reiterated its view on Twitter, saying that Chow Tai Fook's offer was well below the fair value of the company and shareholders should reject the offer.
"It is the responsibility of the company's management to ask investment banks for a professional valuation, to find the true market value of the company, and to invite other potential buyers to make bids. I believe there are other potential buyers in the market that are interested in Giordano, such as the parent company of Japanese clothing company UNIQLO, Xun Xun. Pin (06288), or H&M, etc.”
As for whether Chow Tai Fook's "entry into the company" will improve Giordano's business development, Webb pointed out that under the easing of the epidemic, Hong Kong no longer needs to "close the city", and the retail industry has gradually recovered. Giordano, as a local clothing chain company, will naturally benefit.
On the contrary, this time Chow Tai Fook tried to increase its holdings of Giordano to 50% at a low price before the retail recovery, which is to exclude the competitive bidding process.
Therefore, he opposed the acquisition, calling on other shareholders to reject it.
Webb has repeatedly mentioned that the price of 1.88 yuan is too low. The reporter asked him about the reasonable price in his mind. Webb humorously said that he would not "negotiate with HK01" (not going to negotiate with HK01).
Offer action has multiple benefits
As mentioned above, it is widely believed that Chow Tai Fook and "Friendly" have already firmly controlled Giordano, but why did they suddenly make an official offer?
Liang Jiewen, investment manager of Honggao Securities, believes that this kind of "secret" operation itself is not illegal, but it is not the direct control of the company. In actual operation, it is always different from the single major shareholder with control.
"Under the listing rules, 28% is different from 51%, and some proposals may be passed without a meeting, improving efficiency." In addition, in the future, you can continue to use the name of Chow Tai Fook to "brightly and honestly" sweep the goods, and you don't need to worry about " Bought" 30% threshold.
Referring to the experience of its peers, Esprit (0330), after Zhuang Youjian's wife Luo Qiyin took over, he actively reformed the business and improved its performance.
On the other hand, the concentration of equity will benefit the future stock price development.
Esprit's share price has surged 87.5% year-to-date, outperforming the market.
Liang Jiewen predicts that this time Chow Tai Fook buys Giordano, which may become a "copy" of Esprit and become a catalyst for the stock price to rise.
As for the valuation, Giordano, as a local clothing stock, has a price-earnings ratio of about 15 times and has stable dividends in the past. Liang Jiewen believes that it is not too expensive. It is a reasonable time to buy all at this stage.
He believes that after the equity integration, it is expected to play a synergistic effect with Chow Tai Fook's listed flagship New World (0017).
"Giordano opened a store in Hong Kong or the mainland and could lease it back to the New World Shop, and the lease can be flexibly returned, which is beneficial to business development." Chow Tai Fook also said that after completing the offer, he will review the group's structure, operations and business together with the management. To enhance and consolidate the business by making good use of the shareholders' extensive contacts and experience, especially in the retail industry.
Liang Jiewen, investment manager of Honggao Securities, said that it would be easier to pass the resolution at the general meeting of shareholders.
(Photo by Zhang Haowei)
Still not ruling out paving the way for privatization
As for why he proposed the all-purchase instead of privatization, Liang Jiewen believes that it is because the major shareholders know that this price cannot be achieved, and it is "a senseless attempt", but he does not rule out that this all-purchase action is to pave the way for privatization in the future.
Therefore, he believes that after this operation, the shares can be used as a long-term investment option, and suggested that retail investors should consider whether they need to free up funds and switch to other shares before deciding to "go or stay".
David Webb said on social networking sites that Chow Tai Fook's price was far below the fair value, and he called on shareholders to reject the acquisition.
However, Liang Jiewen pointed out that this time it is not a privatization, and whether shareholders accept the invitation is a matter of "your love and my willingness".
It is worth mentioning that none of the announcements stated that they would not “raise the price”, so David Webb “opened his voice” and may be able to obtain a higher purchase price for other shareholders, but the opportunity is not high.
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