STOCKWATCH: Sing Pao Media sharply higher on buyout deal

HONG KONG (AFX-ASIA) - Sing Pao Media shares were sharply higher after a deal by China Strategic and Star East to sell a 60 pct stake in the company to Capital Strategic Investment at 1.10 hkd per share, dealers said.

They said the acquisition price has become an indication to Sing Pao Media's share price in the near term, but it remains unclear how the new majority shareholder will develop Sing Pao Media's business.

At 10:44 am, Sing Pao Media was up 0.11 hkd or 11.95 pct at 1.03 on trade of 581,000 shares, while Capital Strategic Investment was up 0.03 at 0.43. 

China Strategic was unchanged at 0.095 and Star East was steady at 0.203.

The Hang Seng Index was down 116.67 points at 13,722.43 on turnover of 2.21 bln hkd.

"The gains in Sing Pao Media are the result of the acquisition price. The premium of about 20 pct to Sing Pao Media's previous closing price has become an attraction," Kenny Tang, associate director with Tung Tai Securities, said.

However, Tang said he has reservations about Sing Pao Media.

"It is not clear about the business strategy of the new shareholder, Capital Strategic Investment, for Sing Pao Media. It has been rumoured that Capital Strategic Investment will sell Sing Pao Media's newspaper publishing sector," Tang said.

Apart from the newspaper business, Sing Pao Media is also engaged in property development and securities trading, Tang said, adding the property and securities trading businesses are not very attractive.

"I am taking a wait-and-see attitude towards Sing Pao Media," Tang said.

After the transaction, China Strategic will hold a 9.74 pct stake in Sing Pao and Star East will hold a 5.25 pct stake, a statement issued by China Strategic and Star East said.

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