Reasons for Shaw Brothers privatisation
According to the press today, there ar two possible reasons for Shaw Brothers privatisation:
1) The obvious reason, and also the official and textbook answer, is because the share price is too low and the major shareholder believe that the company should command a much higher premium than what the current trading price is offering.
2) Shaw Brothers privatization paves the way for future sale of stake of TVB (511). Shaw Brothers owns around 26% of TVB and with Shaw Brothers privatized, Shaw Brothers would no longer need their minority shareholders (since there are no more minority shareholders) to approve any sale (no more red-tape like shareholders meeting, etc.). Run Run Shaw is over 100 years old now. There has been rumours saying that he is willing to sell his TVB stake in the past few years.
Apart from a 26% stake in TVB, Shaw Brothers’ other notable assets are 50 million cash, a few pieces of land in Clearwater Bay. Opinions differ on how much premium Shaw Brothers would offer to their minority shareholders to buy back the shares. Some people are saying 10% premium (Ming Pao, Apple Daily) and some people are saying over 100% (HK Standard).
