TCC PROPOSES PRIVATISING TCCI：POTENTIAL TRANSACTION A POSITIVE CATALYST
ordinary shareholders of TCCi to last traded price
We have a Hold rating on TCCi (1136 HK) with TP of HKD2.5and a Buy rating on TCC (1101 TT) with TP of TWD42.0
Taiwan Cement and TCC International announced after the market close on 20April that TCC (1101 TT, TWD36.45, Buy, TP TWD42.0) will offer to acquire all of theoutstanding ordinary shares and preference shares in TCC Int’l (1136 HK, HKD2.60,Hold, TP HKD2.5). Ordinary shareholders of TCCI can either choose the cashacquisition price of HKD3.6 per share or 0.42 TCC share per TCCI share they hold.For preference shareholders in TCCI, the cash acquisition price is HKD3.93 pershare and the share conversion ratio is 0.46. Announcements were released on boththe Taiwan and Hong Kong stock exchanges.
38-65% premium for privatisation: Based on the closing price of TCC and TCCi on18 April, the cash premium for ordinary and preference shareholders would be 38%and 51% respectively. If they choose TCC shares, the premium will be 51% and 65%for ordinary and preference shareholders, respectively, based on an HKD-TWDexchange rate of 3.91.
Currently, TCC holds 63.05% of ordinary shares and 99.98% of preference shares inTCCI. Total cash consideration will be HKD6.6bn and share consideration will beHKD7.2bn equivalent for this scheme. The proposed privatisation still needs severalapprovals from the Taiwan Ministry of Economic Affairs, Taiwan Stock Exchange,Taiwan Financial Supervisory Commission, Hong Kong Stock Exchange, CaymanIslands Court and TCC shareholders.
As highlighted in our report TCC Int'l - Privatisation potentially back in the frame, 6Sep 2016 and subsequent reports, the potential privatisation of TCCi would be anupside risk and potential positive catalyst for TCCi’s share price.
□ .W.e.i. .S.i.m./.T.r.a.c.y. .L.i .汇.丰.银.行.(.中.国.).有.限.公.司