The Chinese firm owned by Hong Kong's richest man, CK Asset Holdings, is now looking into expanding into the hospitality business in the UK
. Li Ka-Shing's firm has reportedly offered to pay $3.27 billion to acquire British pub, restaurant, and hotel operator Greene King.
If the deal is realized, the purchase would be the CK Asset's biggest overseas investment since 2017. The company previously acquired Australian power provider Duet Group for $5.6 billion more than two years ago.
CK Asset offered to pay around $10.30 per share to acquire Greene King's entire issued capital. The British firm currently owns and operates over 2,700 pubs, hotels, and restaurants all around the UK.
According to a statement to the Hong Kong Stock Exchange, CK Asset issued the proposal after it had acquired a 2.9 percent stake in the UK firm. CK Asset also already owned a number of pubs in the UK, which are leased to Greene King.
Greene King is currently operating three separate divisions that are focusing on different industries. These divisions include a "pub company" division, a "brewing and brands" division, and a "pub partners" division. The company managed to report a net profit of $145.62 million on revenues of $2.69 billion for its 13-month period ending in April 2019.
CK Asset's offer for the company includes a cash consideration that is equal to around 9.5 times Green King's earnings, excluding taxes, interest, depreciation, and amortization.
Prior to finalizing the deal, CK Assets will have to seek the approval of the London Stock Exchange and several other industry regulators. Greene King will also need to have its shares delisted from the exchange. For the deal to go through, it also needs to be approved by Greene King's shareholders among other requirements.
Further expansion in Europe will make a lot of sense for CK Assets, given that more than 55 percent of its first-half earnings had come from its European units. Overall, its UK operations contributed roughly 22 percent of CK Hutchison's earnings for the first six months of 2019.
CK Assets currently owns and operates a number of subsidiaries focused on different industries ranging from its core retail business AS Watson Group to other industries such as container port operations and telecommunications.
Following the news of the planned acquisition, CK Asset saw its shares rise by as much as 3 percent to HK$56.70 prior to closing at HK$55.50. Meanwhile, CK Hutchison's shares rose by 0.2 percent following the release of the news.
