Li Ka-shing's infrastructure business has offered to buy out minority shareholders in a utilities subsidiary through a $12.2 billion deal that further simplifies the Asian billionaire's empire and frees up cash for fresh expansion.
The offer topped a flurry of big deals in Asia-Pacific on Tuesday and pushed the region's dealmaking total past $700 billion for only the second time on record, according to Dealogic. More than $100bn of the region's overall volume this year is attributable to Mr Li.
Earlier on Tuesday, regional merger volumes were boosted by the $5.3 billion offer by Japan's MS & AD Insurance for UK-listed Amlin, and Australia's Woodside Petroleum's $11.2 billion approach for smaller rival Oil Search.
Tuesday's offer by Cheung Kong Infrastructure for Power Assets, which focuses on electricity, would simplify ownership of the empire's overall infrastructure holdings. It will also release the net HK$58 billion ($7.5 billion) of cash held by Power Assets to shareholders and its parent, which has a broader mandate to invest in infrastructure projects.
"Infrastructure is about scale to do deals — and this structure will do that better," said one person involved in the process.
In January Mr Li reorganised his flagship groups by splitting their operations more cleanly between a property development group and a diversified conglomerate, CK Hutchison, which holds 76 per cent of CKI — which itself holds 39 per cent of Power Assets.
Tangled family empires are common in Asia and Mr Li's businesses in recent years have tended to increasingly wander into each other's territory, making it hard for investors to be clear about which did what.
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CKI and Power Assets jointly own stakes in 11 separate projects that between them represent more than half the total assets of each.
Victor Li, son of Mr Li and chairman of CKI since its inception in 1996, described the two as "like two brothers we brought up. It will create synergy for the two companies to merge."
"They aren't wearing any make up. It's fair for both CKI and [Power Assets] current shareholders," he added.
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The deal is subject to approval by independent shareholders. CKI is offering 1.04 shares for every Power Assets share. It will also pay out a special interim dividend of HK$5 a share if the deal is approved — equating to about a third of Power Asset's cash pile.
After the deal, CKH will own 49.2 per cent of the new company. That means CKI's results will no longer be consolidated with those of its parent.
HSBC advised CKI, Anglo Chinese Corporate Finance acted as independent adviser to the CKI board.