SF Holding seeking to take over tycoon Robert Kuok's Kerry Logistics for HK$17.6b

[HONG KONG] SF Holding, one of the largest Chinese package-delivery services, is seeking to acquire control of tycoon Robert Kuok's Kerry Logistics Network in a HK$17.6 billion (S$3.01 billion) deal for its global expansion.

The Chinese courier plans to buy a 51.8 per cent stake in Hong Kong-listed Kerry Logistics at HK$18.80 per share, according to a joint statement to the Hong Kong stock exchange on Wednesday. Bloomberg News reported last week that SF Holding was exploring a potential investment in the company.

Kerry Logistics also plans to sell some warehouse assets for HK$13.5 billion and its Taiwan business for NT$4.5 billion (S$213.1 million) to its parent company, the statement said. Kerry Logistics proposes a special dividend of HK$7.28 per share conditional on the completion of the warehouses sale. Shareholders who accept SF's offer will receive HK$26.08 including the special dividend, representing an 11 per cent premium to the last closing price.

Mr Kuok, who is Malaysia's richest person, controls Kerry Logistics through his family holding company Kerry Group and its Hong Kong-listed real estate arm Kerry Properties. SF Holding will offer cash for the Kerry Logistics stake and plans to keep the company listed in Hong Kong. After the transaction, Kerry Properties's holding in the logistics firm will be cut to about 20 per cent from 40 per cent.

"The deal demonstrated the Kuok family's vote of confidence to SF Holding and to myself," SF Holding chairman Dick Wong said in a press briefing on Wednesday. "While Kerry Group gave us the control of the company, we'll still jointly manage Kerry Logistics together in the future."

Shares in SF Holding jumped by their 10 per cent limit in Shenzhen after trading resumed. Kerry Logistics climbed as much as 10.5 per cent to a record high in Hong Kong, while Kerry Properties gained as much as 19 per cent in its biggest intraday advance since May 2009.

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The deal will help SF Holding boost its distribution network and supply-chain services as it gains a footprint across Asia. Kerry Logistics would become the Chinese courier's primary vehicle for international expansion. SF Holding's shares have more than doubled over the past 12 months, helping it surpass FedEx Corp in value and giving it a market capitalisation of about US$83 billion.

The Chinese group owns courier service SF Express, which has benefitted from the rise in online shopping in China fuelled by companies like Alibaba Group Holding and JD.com. In 2019, SF Holding completed the acquisition of Deutsche Post DHL Group's supply chain assets in China for 5.5 billion yuan (S$1.13 billion).

Kerry Logistics offers air freight, trucking and ocean cargo services as well as customs brokerage and cross-border logistics for e-commerce companies. Its clients include fashion brands, food and beverage distributors, consumer goods companies, electronics manufacturers and other companies throughout the region.

Kerry Properties may pay a special dividend as the developer could raise its cash position by as much as about HK$9.3 billion by selling its stake in Kerry Logistics, according to Bloomberg Intelligence analyst Patrick Wong.

JPMorgan Chase & Co is the financial adviser to SF Holding, while the Kerry Group companies have Citigroup as their financial adviser.

BLOOMBERG