According to a Bloomberg report last evening, HNA Group Co.’s (HNA) potential bid for CWT Limited (CWT) has been delayed as HNA weighs on the deal structure. HNA has been in exclusive talks with CWT’s biggest shareholder, C&P Holdings (C&P), since May and is reported to be still deciding which of its entities will be used to make the offer. Bloomberg also reported that both parties continue to be engaged in discussions and still hope to announce a transaction by the end of the year.

Recall that the purchase of C&P’s entire ~32% stake in CWT will trigger a mandatory general offer for all remaining shares of CWT, which may lead to a potential privatization of CWT. Again, we would like to point out that CWT has said that there is no assurance that the ongoing negotiations will result in any definitive agreement.

Given the lack of concrete details, it is best to wait for official announcement on the terms of any potential deal, if it does materialize. We currently have a HOLD rating on CWT with fair value estimate of S$1.93.

Source: OCBC Research - 26 Oct 2016