Increased Offer for Lane Crawford
14 June 1999
On 7-Jun-99 we announced that Webb-site.com represented a group of investors (including editor David Webb) who hold in excess of 10% of the public B-shares of Lane Crawford, sufficient to veto the proposed privatisation of Lane Crawford by Wheelock. We stated our intention to do so unless the offer was increased.
Wheelock has today responded by increasing its offer from $11.80 per A-Share to $12.50 per A-Share, and correspondingly from $1.18 per B-Share to $1.25 per B-Share, an increase of 5.9%. It is unlikely that this increase would have been made without the intervention of Webb-site.com.
The increased offer is almost equivalent to the value of the investment portfolio and property of Lane Crawford but fails to attribute any value to the retail business or brand. The estimated net assets of the retail business are $433m, as shown in the table below:
| Offer value HK$m |
Net assets HK$m |
NAV per A-Share |
|
|---|---|---|---|
| Offer value for 100% of the Company: | 1,413 | 1,850 | $16.36 |
| Less: value of share portfolio at 4-Jun-99 | (501) | (501) | ($4.43) |
| Less: value of property, 31-May-99 | (916) | (916) | ($8.10) |
| Price (RECEIVED) for privatising Net Retail Assets and brand: |
(4) | 433 | $3.83 |
Our Position
As Wheelock has said there will be no further increase, it is now prohibited by the Takeover Code from further increasing its offer.
We await the full financial statements of Lane Crawford for the year ended 31-Mar-99, which we expect to be included in the Scheme document. This is relevant information given that the latest accounts relate to a period which ended 14 months ago. We regard it as essential that the Scheme document should include details of the investment portfolio and its shareholdings, so that shareholders are able to calculate for themselves the value of the portfolio, based on latest market prices, prior to voting.
We regard the increased offer as a minor victory for minority shareholders but continue to doubt that the retail business and its brand are worthless, as the offer indicates. However, if we vote against the privatisation, then due to the size of our stake, the deal would not reach the required 90% approval and would not proceed. In this circumstance, other shareholders would be denied the opportunity to receive the increased offer we have achieved for them (unless they can achieve this in the market).
Therefor, subject to satisfactory disclosure and review of information to be contained in the Scheme document, it is our current intention to abstain from voting at the meetings to consider the Scheme, in order to allow other minority shareholders the opportunity to decide on the privatisation.
© Webb-site.com, 1999
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