On 24th February 2020, Wheelock, Wharf Holdings and Wharf REIC were all suspended from trading pending an announcement. Wheelock announced that the Woo family is proposing to privatize the company via (1) distribution of 1 Wharf Holdings share and 1 Wharf REIC share to every 1 Wheelock share and (2) a cash offer of HK$12 per share.

This news resulted in Wharf Holdings’ share price tumbling 18.1% from HK$19.70 to HK$16.14 at the lowest closing. In this article, we wanted to share our thoughts on this matter and the share price tumbling.

Unlocking Wheelock’s Value

Through this restructuring, Wheelock is able to unlock value for its minority shareholders due to the holding company discount on Wheelock due to its stake in Wharf Holdings and Wharf REIC.

Such a cross holding structure allowed the Woo family to enjoy majority control over the whole group’s business; however, the issue