Valuations Of New World Department Store Delisting Scheme

For the Chinese, "10" is the perfect number, which means the end and the new beginning.

For Hongkong capital

Ten years of listing

For 2017, it may be a year when it becomes completely piecemeal and seeks for subversive changes.

According to the world clothing and shoe net, in June 26th, the new world China Development issued a comprehensive offer and response document. It said that the voluntary conditional cash offer would be made through the Swiss bank Hongkong branch, and all the issued shares of the new world department store (except for the new world development stock) were acquired, and the proposal was privatized.

The offer price per share is HK $2.

This is also a continuation of the delisting of the new world China after the cancellation of the new world China Development in August last 11 months.

The notice indicates that the offer will be accepted from June 27, 2017 and the final time for accepting the offer is four p.m. July 18, 2017 unless revised or postponed in accordance with the code of acquisition in other ways.

According to the notice, the new world development will force the unofferee to acquire the offer shares of the new world department under the tender offer and apply for the cancellation of the listing status of the new world department store's Chinese shares in the HKEx if the receipt of the new world department store's offer shares of not less than 90% and the effective acceptance of no less than 90% interest will be received before the deadline for accepting the offer.

If less than the above share, the offer will not become unconditional and will be invalidated, while the new world department store will still be listed on the stock exchange.

Statistics show that, on the last practical date of June 23, 2017, the legal capital stock of new world department store is HK $1 billion, which is divided into 10 billion shares of new world department store, including 1 billion 686 million shares. The shares of the new world development are 1 billion 219 million shares, accounting for about 72.29% of the total issued shares, and the total number of shares is 467 million shares.

According to the estimated price of HK $2, as of June 23rd, the value of all the new world department stores issued in China amounted to about HK $3 billion 372 million.

Assuming that the offeree fully accepts the offer and calculates 467 million shares of the offer shares, the offer is worth about HK $935 million.

According to the notice, the offer price is about 50.4% of the closing price of the new world department store on the last trading day (June 2nd) of HK $1.33.

At the same time, the average closing price for the 30 and 180 trading days of the new world department store, which lasted for the last trading day (including that date), was HK $1.24, and the premium of about HK $1.15 was about 60.7% and 73.5%.

Earlier, insiders said that the new world department store had a net asset value of more than 3 yuan per share, and its stock price was only 1 yuan.

Long term undervaluation is the cause of its privatization.

The new world department store also confirmed this in its announcement, which indicates that "low flux makes the existing listing platform insufficient to serve as a source of funding for business and development".

In the past ten years, the stock price of New World Department has been priced at HK $5.8 per share in July 12, 2007, down 77.1%, and the market value has evaporated 3/4.

To this end, in the announcement, the new world department store participates fully in the offer's benefits to the offer shareholders, and says that in order to avoid missing, we must act immediately.

The new world department store said its shares had a very low turnover, making it difficult for the offer share holders to make significant market selling in the case of adverse effects on the stock price.

This offer will give the offer shareholders an attractive premium to realisk.

Meanwhile, the New World Department believes that since the listing in 2007, the new world development has maintained the majority of voting rights in the new world department store.

As a result, the other third parties have little chance of acquiring the offer shares at a price comparable to or better than the offer.

There is also the urgency of adjusting the business of the new world department store.

According to the announcement, after the privatization, the new world development will take over the existing business of the new world department store, and the new world department store will face a major adjustment.

In recent years, China's retail market is facing unprecedented challenges, especially the rapid development of e-commerce platform and the emergence of large shopping malls, making the volume of traditional retail stores such as department stores greatly reduced.

In view of the sluggish phenomenon in department stores, it is particularly urgent for new world department stores to make changes to enhance competitiveness.

According to the 2016 annual report, in 2016, the sales of self merchandise in New World Department Store amounted to HK $1 billion 3 million, an increase of about 12% compared with 2015.

In addition, the profit attributable to shareholders of New World Department in 2016 was HK $46 million, a decrease of about 34.6% compared with HK $70 million in 2015, mainly due to the decrease in commission sales revenue during the year.

In the announcement, the new world said that after privatization, it would benefit from the flexibility of non-listed company, including the provision of additional development capital from the new world without facing the risk of market volatility.

After the implementation of the offer, new world development and new world department stores can make timely progress in the light of long-term interests.

And will not distract or face the pressure to fight for short-term performance.

After privatization, administrative, compliance and other listing related costs can also be eliminated.

According to the notice, the new world department store operates 40 department stores and 2 shopping centers on the last practicable date, with a total construction area of about 1 million 646 thousand and 900 square meters. It is distributed in three operational areas in the north, East and West China, covering 22 main cities including Wuhan, Tianjin, Ningbo and Beijing.

Of these, 37 are private stores and 5 are management shops.

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