The voluntary conditional cash offer price of PAG for Chunquan Trust is as high as $4.85, but the current stock price of Chunquan is only $4.06, which is 16% discount to the offer price, reflecting that the market has no high hopes for the conditional offer. The main reason is believed. It was related to the pledge of the PAG’s proposal to remove the Spring REIT administrator last year.
According to the voting results of the special shareholders meeting in November last year:
PAG proposed that the resolution of the recall manager (Spring REIT Asset Management Co., Ltd.) could not be passed due to the opposition of 793.5 million shares. 793.35 million shares, equivalent to 62.5% of the total issued shares of 1.269 billion shares, if the 62.5% equity is the true shareholding of major shareholders, managers and their friendly people, and assuming that these 793.5 million shares will firmly support the major shareholders and The manager, all will not accept the offer, then PAG’s offer must end in failure!
The question is whether the $793.5 million is really the shareholding of major shareholders, managers and friendly people. I don’t think so.
The current shareholding structure of Chunquan is:
Major shareholder RCA Fund holds 345 million shares, equivalent to approximately 27.2%
Manager (Spring REIT Asset Management) holds 25.52 million shares, equivalent to 2.01% equity
The management holds a total of 2.39 million shares, equivalent to approximately 0.19% equity
The three together add up to a total of 29.4%.
In addition, last year, a total of 114.9 million shares were issued to Long Hills Capital Ltd (Beijing Hualian Changshanxing Investment Management Co., Ltd.), which is currently equivalent to 9.05%. If Long Hills Capital is considered a major shareholder, its total shareholding in the camp is at least 488 million or 38.46%. The number of shares, compared with the 79.35 billion shares of the resolutions in November last year, differed by about 300 million shares. I think there may be a minority of the 300 million shares that are the dark-held shares of the major shareholder camp, but most of them should It is a friendly institutional investor holding stock.
The resolution at that time was to remove the administrator and basically did not involve any substantive interests. Therefore, the friendly vote to support the major shareholders and managers is just a little effort, and PAG cannot guarantee that if the manager can be successfully removed, the shareholders will have any substance. Benefits, so even a neutral institutional investor may feel that it is not as good as a quiet, knowing that the manager has been removed, whether it will fall from one pit to another, so it would rather remain unchanged.
However, the current situation is that PAG seeks shareholder support with a simple and direct silver bullet. If the PAG agreement is successfully reached, the shareholders’ benefits are actual, specific and immediate, and institutional investors even with major shareholders and management. People are friendly, but the huge interests are current. Is it better for institutional investors with the main purpose of profit-making to be more important than silver paper?
In addition, we cannot ignore the strength of PAG and M&A experience. I wonder if everyone remembers the three-party equity battle for Yingde Gas (02168) last year? The result is the final victory by PAG!