Business Activities News
- Gome execs buy much of Morgan Stanley sale
Date: 27-Feb-2007 Sources: (Shenzhen Daily)
TWO senior executives of Gome Electrical Appliances Holding Ltd. bought over a quarter of a HK$510 million (US$65 million) offer of shares in the company by Morgan Stanley, one of the executives said.
Gome president Chen Xiao said he and executive director Du Juan, wife of chairman Huang Guangyu, had bought the shares last week because they were confident of the outlook for Gome Electrical Appliances, China's largest electronics retail chain.
'Morgan Stanley was a financial investor so after such a big rise in the value of its shares, we consider its decision to sell its stake a rational one,'Chen said Sunday.
'But we are looking at the company's long-term future so for us, we think it makes sense to buy shares,'he said, adding that he planned to hold the newly purchased shares for the long term.
Chen said he had been willing to buy a much larger proportion of the offer, and perhaps all of it, but was unable to do so because the shares were offered to a range of investors.
A Morgan Stanley private equity fund, which owned a stake in Gome because it had invested in another company that merged with Gome, offered its remaining 57.6 million Gome shares, or about 2 percent of the firm, at a price of HK$8.85 per share, Chen said.
He said he had bought 15 million of those shares, while Du had purchased 1.2 million. Both were already substantial shareholders in Gome.
The offer was priced at a 7.6 percent discount to Gome's closing price of HK$9.58 on the Hong Kong stock exchange Thursday. The shares fell to HK$9.05 Friday in response to the offer, but were still up 48 percent from the end of 2006.
Sales and profits at Gome have been rising rapidly on the back of organic growth as well as mergers. In late November, the company said the Gome group planned to boost sales to 100 billion yuan (US$12.9 billion) in 2007 and more than 200 billion yuan by 2010 from an estimated 80 billion yuan last year.
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