By Peggy Sito From South China Morning Post

In the latest step in the reorganisation of Li Ka-shing’s business empire, Cheung Kong Infrastructure Holdings (CKI) has announced a proposed merger with associate Power Assets Holdings.

The proposed merger would give the group’s infrastructure and utilities arms a stronger balance sheet in order to capture global infrastructure opportunities, CKI chairman Victor Li Tzar-kuoi, Li’s eldest son, said.

He told a press conference yesterday the latest reorganisation had no “political angle”.

There had been rumours that his father, Hong Kong’s richest man, was losing interest in Hong Kong when he unveiled a sweeping restructuring of his business empire in January this year, switching its base of incorporation to the Cayman Islands from Hong Kong. The massive restructuring, completed in June, merged all non-property businesses formerly owned by Li’s two flagships – Hutchison Whampoa and Cheung Kong (Holdings) – into Cayman Islands-based CK Hutchison. All property businesses in the two companies were injected into another new entity, Cheung Kong Property Holdings.

Victor Li said the proposed reorganisation of the group’s infrastructure and utilities units was “simply about returns” and “shareholders’ benefits”.

“Eighty-five per cent of CKI’s assets are located overseas. They are international businesses,” he said. “Infrastructure is a highly capital-intensive industry where bigger is better.”

He said that after the merger, the company would be more diversified and not concentrated in just one country or industry.

CKI, a subsidiary CK Hutchison, is mainly engaged in infrastructure and energy and power businesses. Power Assets, 38.87 per cent owned by CKI before the proposed merger, focuses on power and gas.

Under the proposal, announced yesterday, all the Power Assets shares held by shareholders other than CKI’s subsidiaries will be cancelled, in exchange for newly issued CKI shares.

Every outstanding Power Assets share will be exchanged for 1.04 CKI shares.

CKI intends to declare a conditional special interim dividend of HK$5 a share for all CKI shareholders, subject to the reorganisation proposal becoming effective and approval from Power Assets minority shareholders.

After the merger, CKI will wholly own Power Assets. CK Hutchison will remain the controlling shareholder of CKI.

IMAGES:
The proposed merger is the latest step in the reorganisation of Li Ka-Shing’s business empire. Photo: Nora Tam
How the South China Morning Post covered Daiwa Capital Markets recommending the merger in an analysts’ report released in July.

Li Ka-shing
Often referred to as “Superman” in Hong Kong because of his business prowess, Li Ka-shing is the richest businessman in Asia, and chairs conglomerate Hutchison Whampoa and Cheung Kong Holdings, a property group. Li turned Cheung Kong Industries into a top property group, and Cheung Kong expanded to acquire Hutchison Whampoa in 1979 and Hongkong Electric in 1985. Li is a noted philanthropist and heads a charitable foundation that is a shareholder in Facebook.

For more on this story go to: http://www.scmp.com/business/companies/article/1856352/latest-li-ka-shing-shake-cheung-kong-infrastructure-plans-merger