Jardine Matheson is finally tidying up some decades-old unfinished business. The Hong Kong conglomerate has been made up of a complicated web of crossholdings since the 1980s. It now plans to streamline the group by buying the 15 per cent of shares it does not already own in Jardine Strategic Holdings. It is a good move made at the right price.
Jardine Matheson will delist Jardine Strategic — both listed in Singapore — in a $5.5bn buyout. It will acquire the remaining shares of the group’s second-largest unit for $33 per share and make Jardine Matheson the holding company for its subsidiaries.
The deal makes sense, even if it is priced at a 20 per cent premium to Friday’s closing price. Shares of Jardine Strategic are trading at the lowest level in more than a year and have long traded below net asset value. They currently trade at a steep discount to peers such as Swire Pacific on an enterprise value to trailing ebitda basis.