Wharf’s Spin-off

Written By: and on M&A ADVISORY

Recent commercial activities around the world show an increasing trend in the number of Mergers & Acquisitions and Corporate Divestitures.

In late 2017, the markets witnessed two major spin-offs from Workhorse Group (U.S.), and The Wharf (Holdings) Ltd (HK) (“Wharf Holdings”).

Wharf Real Estate Investment Company Limited (HK Stock code 1997)

With an estimated portfolio of more than HK$230 billion, Wharf Holdings’ Real Estate business is listed on the Main Board of the Hong Kong Stock Exchange, the portfolio consists of six investments properties namely, Harbour City, Times Square, Plaza Hollywood, Crawford House, Wheelock House and The Murray in Central. The group believed that the spin-off would enable them to focus on their core business and allocate resources more effectively.

Timeline for Wharf’s demerger
Date Event
15-Nov-17 Last trading day where the trading of Wharf shares carries a 1:1 share entitlement for Wharf REIC shares.
16-Nov-2017 First trading day where Wharf shares become ex-entitlement.
20-Nov-2017 Recording date for entitlement of shareholders for Wharf REIC shares.
23-Nov-2017 First day of trading for Wharf REIC shares.

Source: DBS Bank Ltd

Therefore, for every board lot of 1,000 shares, an existing shareholder was allocated 1,000 shares in Wharf Real Estate Investment Company Limited (“Wharf REIC”).

Predictably, Wharf Holdings’ share price plummeted from approximately HK$73 per share to HK$31.5 over the past four weeks, while Wharf REIC’s share price position has been accelerating since commencement.

Stock Price Activity (JB0004)
Wharf Holdings

Stock Price Activity (JB1997)
Wharf REIC
.

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