HONG KONG: The share price of Times Ltd, a mainland-based hypermarket and supermarket operator, jumped over 14 percent yesterday after South Korea's Lotte Shopping tabled a HK$4.87 billion buyout offer.

Lotte Shopping Holdings (Hong Kong) Co Ltd, a wholly-owned subsidiary of South Korea's biggest department store operator, Lotte Shopping Co Ltd, offered to acquire all the issued share capital of Times Ltd at HK$5.575 per share in cash.

The offer price represents a premium of 25.3 percent over Times Ltd's last closing price of HK$4.45 before the announcement of the deal yesterday.

The shares closed yesterday up 14.44 percent at HK$5.31 after hitting a high of HK$5.46.

The deal, which is the biggest acquisition in China by a South Korean firm, values the mainland retailer at about 31 times its earnings per share (EPS) reported for 2008.

"The purchase is a bit expensive if judged from the price-earning multiple," said Winnie Fong, an analyst at Taifook Securities Ltd, who covers the retail sector.

"However, the transaction is considered a good deal for Lotte Shopping, as it will help the Korean retailer expand its operations in China," she added.

With the purchase of Times Ltd, Lotte Shopping will become a major hypermarket and supermarket operator in Eastern China. The Korea retailer currently operates only one department store in Beijing.

As of end-June, Times Ltd operated 66 stores, including 53 hypermarkets and 13 supermarkets, occupying a total gross floor area of approximately 903,000 square meters.

It posted a net profit of 77.5 million yuan for the first half ended June 2009 from revenue of 2.15 billion yuan.

"The purchase price is fair, as it includes a strategic value," said Forrest Chan, a retail-sector analyst at CCB International Ltd.

"Such kinds of assets are very much in demand, as foreign players are eager to enter the mainland retail market," he explained, adding that it will take years for new players to build up operations by organic growth.

"It also had to offer this much to win the deal away from other suitors," he added.

Before the announcement of the deal, rival hypermarket operator Wumart Stores Inc was also reportedly in talks with Times Ltd for a deal.

Kenneth Fang, Chairman of Times Ltd, has accepted the offer and executed an irrevocable undertaking to sell his 72.3 percent stake in Times Ltd to Lotte Shopping.

(HK Edition 10/21/2009 page4)