BTN News: In a move to fend off a $1.8 billion cash takeover offer from Chairman Reinold Geiger, Beauty company L’Occitane International has offered to take itself private in return for a 2 percent stake that the 43 percent of independent shareholders have in the firm. The owner of approximately 72.4% of the Hong Kong-listed skincare company, Geiger is giving the remaining shareholders a chance to take: either the existing HK$34 per share cash offer, or a scrip alternative of 10 shares in the new private company for every share they currently hold.
The news pushed L’Occitane’s shares up some 2.6% to HK$33.50—their highest level since mid-January this year. Shares of the company have rallied more than 13% on since news of the initial privatization offer on April 29.
Background and Implications
Luxembourg-based L’Occitane has a huge milestone becoming one of the first non-Chinese, non-Asian companies to list in Hong Kong in 2010. The new cash offer values the shares Geiger doesn’t own at about HK$13.88 billion ($1.78 billion), including vested options, the company said in a filing to the Hong Kong Stock Exchange.
This further underscores a broader trend where numerous Hong Kong-listed companies are mulling a move to go private in the face of erratic stock market. Geiger is reviving a prior buyout bid, signaling a long-standing desire to change the nature of company ownership.
Currency Reaction and Trade Implications
The proposed alternatives are designed to enhance the flexibility and potential value creation options for the minority shareholders. The cash option presents a premium but immediate liquidity, while the scrip option enables existing shareholders to remain on board with a stakes in the restructured private company for which, theoretically at least, it might one day yet reap the benefit of growth in company fortunes.
Timing of the announcement seems strategic given the market volatility and uncertainty – something that might offer stability to shareholders eager to hear that the privatization.
Conclusion
As L’Occitane International moves through this key juncture, the market will be keen to gauge minority shareholders’ reaction to Geiger’s revised offer. What Albemarle opts for — cash now or future investment in the company again — could be an interesting theme for the Hong Kong market in future.
