Usurpation By Ultimate Parent
On 3 October 2007, HLD proposed to pay market value only to gain control of Towngas. The 39.06 percent stake in TownGas held by subsidiary Henderson Investment was valued at HK$42.86 billion in cash and convertible notes for the purposes of the transaction. Minority shareholders of Henderson Investment, who together hold 30.73%, would receive 204.1 million Henderson Land shares and HK$1.19 billion in cash.
The offer was considered by analysts to be favourable to the Company, and shareholder activist David Webb criticised the deal saying Henderson was acquiring the stake on the cheap, without paying any control premium to minority shareholders of Henderson Investment. Webb further criticised the nature of the offer as a back-door privatisation of Henderson Investment, which would virtually be a shell company after the transfer of the stake.
On 7 November, Henderson sweetened the offer to appease minority shareholders by increasing the cash portion to HK$2.24 per share, who threatened to vote down the proposal. On 7 December 2007, Henderson secured shareholders' support for the usurpation.
Read more about this topic: The Hong Kong And China Gas Company
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