Qatari Fund, Lau Said to Consider Full Takeover of Lifestyle

By Dinesh Nair and Jonathan Browning

Qatar Investment Authority and Hong Kong’s Lau family are considering options including a full takeover of department store operator Lifestyle International Holdings Ltd. (1212) after the sovereign wealth fund bought a minority stake, according to people with knowledge of the matter.
QIA and Thomas Lau, Lifestyle’s chief executive officer and largest shareholder, see more value in the $2.9 billion company by taking it private, two of the people said, asking not to be identified because the discussions are confidential. QIA today agreed to buy 19.9 percent of Lifestyle, the owner of the Sogo department store in Hong Kong, for about HK$4.78 billion ($616 million).
A full takeover offer isn’t imminent, the
people said. Lifestyle shares erased earlier losses to close up 1.4 percent in Hong Kong.
Today’s investment in Lifestyle marks QIA’s first major acquisition in Asia, with the firm adding to luxury consumer investments including the Harrods department store in London and a 12.6 percent stake in jewelry retailer Tiffany & Co. (TIF) The fund is targeting about $15 billion of investments in China, north Asia and Singapore in the medium to long-term, one person said.
QIA bought the stake today from a investment company equally owned by Lau and Hong Kong billionaire Cheng Yu-tung’s Chow Tai Fook Enterprises Ltd. QIA becomes the second-largest shareholder in Lifestyle, according to the statement today.

Photographer: Timothy O'Rourke/Bloomberg News

QIA today agreed to buy 19.9 percent of Lifestyle, the owner of the Sogo department... Read More

Democracy Protests

Representatives for QIA weren’t immediately available to comment.
“The rumor about the privatization of the company is untrue and groundless,” Lifestyle Chief Financial Officer Terry Poon said in an e-mailed statement.
Lifestyle shares have fallen 12 percent in the past year. Lau controls about 29.7 percent of the company following QIA’s purchase, including a 13.55 percent direct stake, according to exchange filings.
Before today’s late gain, the company traded at 10.8 times estimated full-year earnings, while competitor Parkson Retail Group Ltd. was valued at 13.3 times and Intime Retail Group Ltd. at 13 times, according to data compiled by Bloomberg.
Lifestyle’s flagship store in the Causeway Bay shopping district on Hong Kong Island contributed 69 percent of sales in the six months through June, according to its interim results. Pro-democracy protesters in the city have camped out on streets near the store for the last three weeks to oppose Chinese government plans to control Hong Kong’s 2017 leadership election.
Major Hong Kong retail chains saw declines in sales of as much as 50 percent earlier this month during the week-long Chinese National Day break, known as Golden Week, according to a survey by the Hong Kong Retail Management Association. Lifestyle hasn’t released sales figures for the period.
QIA, which has investments in banks including Barclays Plc and Credit Suisse Group AG (CSGN), will have a non-executive director on the board of Lifestyle as part of today’s deal, which will be completed in two days, Lifestyle said.