Lifestyle International seeks to privatise Sogo for HK$1.88bn

Lifestyle International Holdings, operator of Sogo department store in Hong Kong, is planning to privatise the company in a deal worth HK$1.88 billion (bn). Thomas Lau Luen Hung, chairman and majority shareholder of Lifestyle, has proposed a joint announcement on his company Emerald Energy Holdings' website on 7 August 2022.

According to the proposal, Lau has offered to buy 376.8 million shares, or 25.09% of the retailer stakes he does not already own or control, at HK$5 each for a total of HK$1.88 bn. That would represent a 62.3% premium over the stock’s closing price of HK$3.08 on August 4 before trading was halted on Friday. The stock surged 45% to HK$4.47 as of 10am local time, approaching the take-private offer price. If sustained, it would be the stock’s biggest jump on record.

In terms of the shareholding structure of the company, the offeror concert parties (other than members of DBS Group) beneficially own, control or have direction over 114 million shares, representing approximately 76.49% of the issued shares; the independent shareholders hold 353 million shares, representing approximately 23.51% of the issued shares. Under the proposal, if the scheme is approved and implemented, the scheme shares will be cancelled and extinguished and each scheme shareholder as at the scheme record date will be entitled to receive the cancellation price of HK$5.00 in cash for each scheme share cancelled and extinguished. 

The proposal and the scheme will become effective and all shareholders are subject to the fulfilment or waiver of the conditions as described in the section headed “Terms of the Proposal – Conditions of the Proposal” of this joint announcement on or before the long stop date, failing which the Scheme will not become effective and the proposal will lapse.

An independent board committee has been established to advise the independent shareholders as to whether the terms of the proposal and the scheme are fair and reasonable, and whether to vote in favour of the scheme at the court meeting and the proposal at the general meeting.  An independent financial adviser will also be appointed to advise the committee in connection with the proposal and the scheme.

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