Wanda Property Deal Faces Hurdles as APG Balks Over Price

(Bloomberg) -- Billionaire Wang Jianlin is facing hurdles in his buyout bid for Dalian Wanda Commercial Properties Co., which could be the biggest privatization Hong Kong's ever seen, after a $460 billion Dutch fund said the offer is too low.

"We have concerns about the privatization plan" because the offer isn't attractive, Yoo-Kyung Park, a director in charge of corporate governance at APG Groep NV's asset-management arm, said in an interview in Hong Kong. APG hasn't made a decision on which way it will vote on the $4.4 billion transaction, she said.

Still, APG would make a profit from the deal if it sold out because it bought into the stock during its 2014 initial public offering. By contrast, BlackRock Inc. built up most of its holdings in Wanda Commercial in the second quarter of last year, when the stock peaked at HK$78, and stands to lose about HK$235 million ($30 million) if Wang's HK$52.80-a-share offer goes through, according to data compiled by Bloomberg.

In its filing last month, Wanda Commercial said it won't raise the offer price. The shares tumbled 6.1 percent, the most in 10 months, and closed at HK$46.10 on Wednesday.

APG and BlackRock, which together own a combined stake of almost 12 percent, are key to the outcome of the proposal because the deal would collapse if even 10 percent of shareholders reject the offer. That would be a blow for Wang, who's seeking to relocate Wanda Commercial's listing to mainland China, where Asia's second-richest man could fetch higher valuations and step closer to his goal of running a business empire with a market value of $200 billion.

BlackRock, the third-largest investor in Wanda Commercial's Hong Kong shares, declined to comment on its potential losses and how it will vote. The world's largest asset manager held 44 million Wanda Commercial shares, or a 6.8 percent stake, as of last month, according to data compiled by Bloomberg. APG ranks sixth at almost 5 percent.

Under terms set out by the Beijing-based property developer, Wanda needs fewer than 10 percent of votes opposing it and at least 75 percent supporting the plan. The vote will occur within 45 days of Wanda Commercial issuing a notice. If the transaction is shot down, Wanda won't be able to try again for 12 months, according to Hong Kong regulations.

Oscar Choi, an analyst at Citigroup Inc., wrote in a report in May that the deal faces high hurdles since few individual shareholders holding big chunks of shares could block the offer.

Of Wanda Commercial's top 15 shareholders, Hang Seng Bank Ltd., Principal Financial Group and Mirae Asset MAPS Investment Management Co. also stand to lose money with Wang's offer, according to Bloomberg data. Major Wanda investors who stand to gain include China Life Insurance Co. and Kuwait Investment Authority. The Kuwaiti fund declined to comment, as did Hang Seng Bank, Mirae and Wanda. China Life and Principal didn't immediately respond to requests for comment.

As to BlackRock, its average cost was over HK$58 a share, with most of the purchases occurring in the second quarter of 2015, when shares of the developer traded at an average of about HK$63 each, based on disclosed transactions compiled by Bloomberg.

Wang and his flagship Dalian Wanda Group Co. control the property developer through majority holdings in the company's unlisted shares in mainland China. The shares in Hong Kong are listed but they only account for 14 percent of the outstanding stock. Of the listed shares, about half are owned by 11 minority shareholders, who mostly bought in when the company had its IPO.

Wanda's proposed transaction would be the biggest going-private deal on the Hong Kong stock exchange, beating Alibaba Group Holding Ltd.'s proposal in 2012 to take its Hong Kong-traded unit private for as much as HK$19.6 billion, according to Bloomberg data.

--With assistance from Fox Hu Zhang Dingmin Kyoungwha Kim Adrian Leung and Moxy Ying To contact the reporter on this story: Prudence Ho in Hong Kong at pho83@bloomberg.net. To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Sree Vidya Bhaktavatsalam, Sam Nagarajan