Offer price: RMB38/share (+18% vs the closing price, RMB32.15/share beforesuspension)Period: 30 days after the announcement. The subscription will only start after itannounces a full circular.
Deutsche Bank View
Shanghai Jahwa (Jahwa) announced after market close today that ShanghaiJahwa Group, the parent company of Jahwa listco, plans to buy up to 20% ofJahwa's shares at RMB38/share. Jahwa’s shares will resume trading from 13 Oct.
As we mentioned in our report titled Shanghai Jahwa - Jahwa parent co. to buy20% stake of Jahwa listco at RMB38per share published on 13Oct 2017, webelieve the offer price (RMB38/share) is more attractive with a larger premiumvs the average price of the previous three/six months and the last tender offerin 2015. For now, Shanghai Jahwa Group has increased its share of the Jahwalistco from 27.09% to 47.09%. Ping An has also increased its shareholding from32.02% to 52.02% and has become a controlling shareholder of the company. Aswe mentioned earlier, we believe its share price will normalize after the exercise.We maintain our Hold recommendation on Jahwa.
Future plan: Apart from this tender offer, Shanghai Jahwa Group does not havea plan to continue increasing the stake of Jahwa listco in the next 12 months.
Tender offer from Ping An oversubscribed
Seller: All the shareholders excluding all the entities under Ping An (ChinaPingAn Life Insurance, Shanghai Huisheng Industrial Company, and Shanghai Tai FuXiang Er Equity Investment Fund Partnership).
Shanghai Jahwa (Jahwa), whose trading was suspended on 1Dec after itssubscription for the tender offer from its parent company Shanghai Jahwa Groupwas closed on 30Nov, announced the results of the tender offer and resumedtrading on 4Dec.
Rationale: 1) The share acquisition is a way to strengthen the parent company’scontrol on the listed company. 2) Premium in offer price reflects Ping An’sconfidence in the China HBC industry and Jahwa’s long-term perspective; 3) Thistender offer is a partial tender offer; i.e., the parent company intends to maintainJahwa’s listing status after completion.
From 1Nov to 30Nov, 261m shares subscribed to the tender offer, accounting for39% of the total shares, surpassing the acquirer’s original plan (135m shares,i.e. 20% of total shares). Thus, for each shareholder, the no. of actual acquiredshares is 51.6% (135shares /261shares) for the subscribed shares. All the soldshares have been transferred and the payment was settled by 4Dec.The company also announced that Mr Huang Jian, vice president of Jahwa, sold23,226shares to the Jahwa parent company, accounting for 0.0034% of totalJahwa's shares. After this transaction, he owns 0.026% of Jahwa.
No. of shares: Involves 135m shares (20% of total issued shares).
Amount: RMB5.1bn, 20% of the amount (RMB1bn) to be deposited as guarantee.
Capital funding: from Ping Pu Investment, the parent company of ShanghaiJahwa Group under Ping An.
Details are as below:Buyer: Shanghai Jahwa Group (parent company of Jahwa listco).