The shares of Lifestyle International Holdings Ltd. jump in early trading after the company said its majority shareholders plan to take the Hong Kong-based retail operator private.
Lifestyle International shares rose as much as 50% to HK$4.63 ($0.59) after the company announced its privatization offer on Monday. Shares are up 45% at HK$4.45.
In a statement to the stock exchange, the company said its majority shareholders had tendered 376.8 million shares at HK$5.00 each, a 62% premium to Lifestyle International’s closing price on Friday.
Lifestyle International said one of the main reasons for the offer was a slowdown in Hong Kong’s retail environment caused by city-wide protests in mid-2019 and the subsequent outbreak of Covid-19 in early 2020.
The acquisition will be financed through a non-revolving line of credit, the company said. Lifestyle International will be excluded if the offer is successful.
The proposed privatization was a “positive surprise”, Citi analysts write in a note.
“Given significantly diminished investor interest, demonstrated by weak equity liquidity and depressed valuation following the pandemic and border closures, we believe privatization is a reasonable move,” the analysts say.
Write to Yi Wei Wong at firstname.lastname@example.org