Franshion Buys Development Firm for $1.6 Billion

Franshion Properties said on Friday it would a buy Chinese high-end real estate development and management firm for 11 billion yuan ($1.6 billion), as it seeks to become a top tier property investor in the mainland.

The China property investor said it would buy 54.87 percent of China Jin Mao from its major shareholder, Sinochem Hong Kong, for 6.04 billion yuan, of which 2.4 billion yuan would be paid in cash with the remainder to be settled through the issue of 1.49 billion new shares at HK$3.43 each.

That price represents a 3.7 percent discount to the stock's HK$3.56 closing price on Thursday.

Franshion will buy a further 45.13 percent stake in Jin Mao from seven other shareholders for 4.96 billion yuan. Some 40 percent of the purchase will be paid for in cash, with the remainder settled by issue of 970.1 million new shares at the same price of HK$3.43 each.

Jin Mao, a Chinese high-end real estate development and management firm, has equity interests in Jinmao Tower, Hilton Sanya Resort & Spa, JW Marriott Shenzhen, the Ritz-Carlton, Sanya and the Westin Beijing.

"The acquisition will significantly elevate the assets scale and quality of the company's office and hotel portfolio," Franshion chairman Pan Zhengyi said in the statement.

"In addition, the acquisition will provide the company with the opportunity to strengthen its presence and leadership in tier-1 cities, and expand into new cities and overall enhance market share."

Franshion also said it was in preliminary talks with its ultimate parent Sinochem Corporation on the possible acquisition of Sinochem Corporation's interests in Shanghai Yin Hui Property Development, but no agreement had yet been reached.