SCMP Discloses Hong Kong Media Takeover Talks After Stock Surge
Feb. 19 (Bloomberg) -- SCMP Group Ltd., publisher of the South China Morning Post, said it was in talks to buy “a group of media companies” in Hong Kong after its shares surged the most in more than 15 years.
The company so far has only entered a non-binding term sheet, it said in a statement yesterday, without naming the potential target. The Hong Kong-based publisher will resume trading today. It was halted at lunchtime yesterday following a jump of as much as 31 percent.
SCMP, controlled by billionaire Robert Kuok, could buy a Chinese-language publisher or a TV broadcaster, said Doug Young, a journalism professor at Fudan University in Shanghai. Sales at the company’s flagship title have tumbled amid competition from the Internet and free newspapers.
“Buying a broadcaster could generate synergy,” said Young, the author of “The Party Line: How The Media Dictates Public Opinion in Modern China.” “Advertisers like it if they can buy deals in one place to get ads in print, online and on TV.”
SCMP, the publisher of Hong Kong’s only paid-for daily English-language newspaper, also faces a possible delisting because its publicly traded shares are set to fall below an exchange-imposed minimum.
Kuok’s Kerry Media Ltd. is due to buy stock from three banks, which will cut SCMP’s free float to about 11 percent. SCMP has said its shares could be suspended Feb. 26 until the proportion of stock held by minority investors returns to above 25 percent.
SCMP was up 23 percent in Hong Kong trading at HK$2.15 when it was suspended. The publisher’s other titles include recruitment publications and Chinese-language versions of Cosmopolitan and Harper’s Bazaar magazines. It doesn’t own a Chinese-language newspaper.
Kuok, 89, bought a controlling stake in SCMP from Rupert Murdoch in 1993. He bought a further 30 percent for HK$1.1 billion ($142 million) in 2008 through Kerry Group Ltd. The publisher’s sales declined to HK$946 million in 2011 from HK$2.4 billion in 1997.
Kuok is ranked 38th in the Bloomberg Billionaires Index with a net worth of $18.8 billion. He also has interests in property, hotels, palm oil and logistics.
The South China Morning Post, first published in 1903, has an audited weekday circulation of 108,047, according to a marketing brochure on its website. The newspaper’s local rival, the Standard, stopped charging readers in 2007 to boost circulation after the government ended a requirement for companies to publish stock-exchange announcements.
--Editors: Neil Denslow, Michael Tighe