Shares of the Hong Kong-listed ESR Group Limited (HK:1821) rallied almost 3% as the company received a privatization offer, which was supported by its shareholders. The offer also represents the largest privatization deal on the Hong Kong Stock Exchange (HKEX) since 2021. The offer was formally received in April, which led to a surge in shares after the announcement.
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This time, the company suspended the trading in its shares since November 29, ahead of the announcement, and resumed today. Upon finalization, shares will be delisted from the HXEX.
ESR Group is a real estate management company focused on developing and maintaining properties, mainly in Asia.
ESR Group to Go Private
According to ESR Group’s announcement, the buyout group is a consortium, which is led by investment firms Starwood Capital Group, Sixth Street, and SSW Partners. Additionally, it includes the company’s founders, Warburg Pincus and Qatar Investment Authority. These entities together hold around 40% of the total issued shares of ESR.
The consortium has proposed HK$13 per share for the 60% of the company it does not own. This bid represents a 56% premium compared to the share price in April, valuing the company at HK$55.19 billion ($7.09 billion). Meanwhile, shareholders also have the option to exchange shares for those in an offshore entity under the consortium’s control, with the flexibility to choose a mix of cash and share swap.
The consortium emphasized the need for a strategic transformation, including divesting non-core assets and focusing on new sectors to unlock long-term value. It believes this transition is best achieved in a private setting. Overall, the company has faced challenges in recent years due to sluggish and uncertain markets in China and Hong Kong.
What Is the Target Price for ESR Group?
As per the consensus rating on TipRanks, 1821 stock has received a Moderate Buy rating, supported by two Buy recommendations. The ESR Group share price forecast stands at HK$15.86, which implies an upside of 38.6% from the current level.
