UPDATE 1-TOM Group to take TOM Online private for $201 mln
(Adds details, share price jump)
HONG KONG, March 12 (Reuters) - TOM Group Ltd. (2383.HK), a media services firm backed by billionaire Li Ka-shing, said it planned to pay about US$201 million to buy the shares it does not own in unit TOM Online Inc. 8282.HK, sending stock in the smaller firm nearly a third higher on Monday.
The deal between Beijing-based Tom Online and its parent, TOM Group -- understood to be controlled by legendary deal-maker Li
-- gave investors an exit from a unit that has long been trading -- gave investors an exit from a unit that has long been trading at a discount to peers but harbours valuable assets.
TOM Group said it would fork out over HK$1.57 billion (US$201 million) for the remaining 1.03 billion shares in TOM Online -- a 24.27 percent stake. TOM Online dominates China's mobile value-added services sector.
Shares in both firms had been suspended since last week. That offer price represented a 33.3 percent premium to the target firm's share price on March 2 -- the last traded price before its suspension.
TOM Online's stock surged 28 percent at Monday's open and clung to that level throughout the morning. TOM Group's shares had risen 5.4 percent by midday, outperforming a 0.8 percent gain in the broader market .HSI.
TOM Group said it would fund the purchase by borrowing from financial institutions. Goldman Sachs (GS.N) is a financial adviser to TOM Group.
For a full statement regarding the deal, please click on [nSHK707027].
Apart from its mobile services arm, TOM Online's other assets include joint ventures with Skype and U.S. Web auction giant EBay Inc. (EBAY.O) -- those might have allowed it to command a premium purchase price, analysts say.
Before Monday's sharp rally, Tom Online was forecast to trade at a price-earnings ratio of 15.8 in 2007, Morgan Stanley estimated, versus 34 for portal SINA Corp. (SINA.O) and 26.3 for rival media services firm Tencent Holdings Ltd. (0700.HK).
Shares in TOM Online had slid 26 percent this year through to March 2, compared to a 2.6 percent drop in Hong Kong's benchmark Hang Seng Index .HSI over that same period.
(US$1=HK$7.8)
((Reporting by Donny Kwok, editing by Anne Marie Roantree; donny.kwok@reuters.com; Reuters Messaging: donny.kwok.reuters.com@reuters.net; +852 2843 6441, Fax +852 2845 0636)) Keywords: TOM TOMONLINE/
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