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Developer Wheelock shuffles units
By Alex Frew McMillan
HONG KONG, China (CNN) -- Wheelock and Co. shares tumbled almost 7 percent on Wednesday after the company announced a long-awaited shuffling of its subsidiaries. The conglomerate, which focuses on property development and retail, said its New Asia Realty and Trust Co. subsidiary will pay HK$1.02 billion ($130 million) to absorb affiliate Realty Development Corp. New Asia is offering HK$3.20 a share for the 28 percent of Realty Development that it doesn't already own, taking it private if successful. Investors had been speculating that Wheelock would take both subsidiaries private and sold off its shares as a result. Wheelock develops hotels, housing and shopping centers in China, Hong Kong and Singapore through its subsidiaries New Asia Realty, Wharf Holdings and Marco Polo. Possible resistance to bidStock in Hang Seng component Wheelock closed 6.84 percent lower at HK$5.45. That contributed to the Hang Seng's 1.72 percent slide. The offer put a premium of around HK$0.50 on Realty Development Corp.'s stock price. But there is speculation the deal may see opposition from minority shareholders pushing for a higher price. Wheelock met with similar opposition when it bought high-end department store chain Lane Crawford in 1999. The move is the first restructuring since Peter Woo returned as chairman of Wheelock and Wharf in April. Woo resigned in 1997 to run as Hong Kong's chief executive, but shipping magnate Tung Chee-hwa pipped him to the position. Woo currently heads Hong Kong's Trade Development Council. Criticized for complicated structureWheelock has been criticized for its complicated corporate structure, with analysts pushing it to streamline. The company owns 74 percent of New Asia Realty. New Asia said privatizing Realty Development Corp. made sense because the subsidiary had not raised money in the capital markets since 1972. The subsidiary owns investment properties and development projects, including 5.3 million square feet of farmland tagged for development. Wheelock follows a trend of corporate reorganizations in Hong Kong's beleaguered property industry, with the Hang Lung Group, New World Development and Henderson Land all having revamped their structures. A bubble built in Hong Kong's property market as the city approached its handover to China in 1997. But property prices have declined some 65 percent in the five years since it burst.
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