In major news on Hong Kong stocks, ESR Group Limited (HK:1821) shares rallied by 26% today after the company received a takeover bid from a consortium of U.S.-based PE (private equity) firms for a potential privatization. The consortium, led by Starwood Capital, also includes Sixth Street Partners and SSW Partners currently owns 15.7% of ESR. Notably, the company’s largest shareholder, Warburg Pincus, which owns a 14.04% stake, is not a part of this consortium.
ESR Group is a real estate management company focused on developing and maintaining properties, mainly in Asia.
ESR’s Privatization on the Cards
ESR suspended trading in its shares before the proposal’s announcement yesterday. It received the proposal formally on April 25. The proposed offer could result in the delisting of the stock, if finalized.
According to the terms of the proposal, ESR shareholders would have the option of receiving cash consideration or retaining their shares in the future private company, contingent upon the final terms of the roll-over arrangements.
Warburg, along with the company’s founders, have expressed their approval of the offer, believing it to be in the shareholders’ best interests. ESR has established an independent board committee and enlisted Citigroup Global Markets as a financial advisor to assess the proposal.
ESR Group Share Price Target
Following the announcement, DBS analyst Ben Wong confirmed a Buy rating on ESRGroup stock, predicting an upside of 70%.
As per the consensus rating on TipRanks, 1821 stock has received a Strong Buy rating, supported by all Buy recommendations from four analysts. The ESR Group share price forecast stands at HK$17.36, which implies a huge upside of about 74% from the current level.
