China Merchants Group Explores Taking $4 Billion Port Unit Private

(Bloomberg) -- China Merchants Group Ltd. is exploring taking China Merchants Port Holdings Co. private after shares of the state-owned conglomerate's unit slid in Hong Kong this year, according to people with knowledge of the matter.

China Merchants Group has held initial discussions with advisers to study the feasibility of buying all of the China Merchants Port shares that it doesn't already own, said the people, who asked not to be identified as the information is confidential. China Merchants Group owns about 63% of the port unit, data compiled by Bloomberg shows.

Shares of China Merchants Port jumped as much as 29.5% in Hong Kong on Tuesday after the Bloomberg News report. The stock closed down about 31% for the year on Monday, underperforming the benchmark Hang Seng Index.

Deliberations are at an early stage and China Merchants Group could decide against a transaction, the people said. Representatives at China Merchants Port and China Merchants Group declined to comment.

A take-private deal would see China Merchants join other state-owned enterprises in retreating from the Hong Kong stock exchange. China General Nuclear Power Corp. announced in February a proposal to privatize and delist its renewable energy unit CGN New Energy Holdings Co.

China Merchants Port was listed in Hong Kong in 1992 and currently has a port network portfolio spanning 36 ports in 18 countries and regions, according to its website. Its parent company China Merchants Group, founded in 1872, is based in Hong Kong and counts transportation, property and finance as its core businesses.

China Merchants Port said in a statement to the Hong Kong stock exchange on Wednesday that it was not aware of information related to recent “press speculation” and that it did not have any related information that should be disclosed. Shares in the company fell 9.3% as of 11:29 a.m. Wednesday.

With assistance from Bloomberg