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Blackstone Set To Make A $3.05 Bln Bud To Acquire Chinese Office Developer Soho China

Blackstone Set To Make A $3.05 Bln Bud To Acquire Chinese Office Developer Soho China
The United States based private equity firm Blackstone Group Inc. is close to striking an agreement for the acquisition of the office developer Soho China Ltd., said reports quoting sources familiar with the matter, in what would make the deal, if successful, the biggest real estate investment by the Blackstone Group in China, the largest economy of Asia.
According to the unnamed sources quoted in the report, the two companies could announce a deal as soon as within this current week.  Sources also reportedly said that a valuation of about $3 billion would be accorded to Soho China in the deal. According to the valuation given to the developer at its last closing price, the market value of the Chinese company was about HK$19.8 billion ($2.55 billion).
Trading in the stocks of Soho China in Hong Kong exchange was halted on Tuesday till there was an announcement in about the deal according to the takeover code of the city. The suspension in its stock trading came after its stock price surged 48 per cent last week which was the highest for the company since it had got itself publicly listed in 2007.
Sources reportedly said that even though the negotiations between the two companies were in their last stages, they also warned that the talks could drag on or fall apart ultimately. There were no comments on the reports from Blackstone and Soho China.
Because of a shortage of new assets in its pipeline and a fall in office rents in key Chinese cities, there was significant and increasing pressure on Soho China’s profit which had made it a takeover target since early 2020. In March last year, the Beijing-based developer had said that it was in negotiations for a possible deal with foreign financial investors and the talks could culminate in a bid for acquisition of the Chinese company.
According to media reports at that time, discussion for a deal for Soho were being held back then by Blackstone but the talks broke down because of concerns about financing for a deal and the impact of the Covid-19 pandemic on the economy. All previous talks with potential investors had been terminated, Soho had said in August.
According to the website of Soho, the company has already developed 54 million square feet (5 million square meters) of commercial projects in Beijing and Shanghai. The signature Bund SOHO in Shanghai and the landmark Wangjing SOHO in Beijing, designed by Zaha Hadid, the first woman to receive the prestigious Pritzker Architecture Prize are among the key assets handled by the company.
According to the website of Blackstone, the group’s real estate business unit has about $196 billion of capital under management. A $1.1 billion deal was struck by the company y in November for purchasing a controlling stake in the largest urban logistics park in southern China’s Greater Bay Area.

According to reports, a Shanghai mall and office complex from Mapletree Investments Pte was acquired by Blackstone in late 2018 for 1.2 billion.

Christopher J. Mitchell

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