Dali Foods Privatization Offer Surprises, But May Be an Option -- Market Talk

Dow Jones2023-06-28

0226 GMT - The Dali Foods founder's bid to take the company private for HK$5.71 billion was surprising, but looks like an option given current conditions, Jefferies analysts say. In a call, management said the reason for the bid is the stock's weak price and limited volume, analysts Lisa Liao and Anne Ling say. This hinders ability to fundraise on the market and could affect business development, while delisting would cut admin costs and provide long-term investing flexibility, management said. The offer price also gives shareholders an exit without a liquidity discount. The HK$3.75/share bid is 21% higher than Jefferies's 12-month target for the company. Jefferies agrees that interest in names like Dali with limited growth profiles is thin, but notes that their dividend payouts tend to be generous given strong cash flows. (fabiana.negrinochoa@wsj.com)

(END) Dow Jones Newswires

June 27, 2023 22:26 ET (02:26 GMT)

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