GLP injects $435.9m into China’s largest state-owned warehouse logistics firm

It now owns a 15.5% stake in CMSTD.

Mainboard-listed Global Logistic Properties has inked a RMB 2 billion ($435.9m) deal to acquire a 15.5% equity stake in China Materials Storage and Transportation Development Company (CMSTD), China’s largest state-owned warehouse logistics provider.

CMSTD holds an extensive portfolio of logistics assets and land holdings in premium locations across the country and owns over 9 million sqm (100 million sq ft) of land area, GLP said in a statement to the SGX.

In addition to taking an equity stake in CMSTD, the two companies will also establish a joint venture which will invest over RMB 3.6b ($784.9m) to develop 1.3 million square meters of buildable area across China.

GLP will own 49% of the JV, with the option to increase its ownership to 50%. Additionally, GLP has the priority right to partner with CMSTD to redevelop CMSTD’s existing land and facilities and the JV has the right of first look for all future logistics land sourced by CMSTD.

The acquisition price of RMB 5.86 per share represents a 43% discount to the last transacted price of CMSTD shares on the Shanghai Stock Exchange on 9 December 2015. 

The transaction boosts GLP’s net asset value by RMB 1 b ($219m) or 5 Singapore cents per share. With this transaction, GLP becomes the second largest shareholder of CMSTD and receives three of 11 seats on CMSTD’s Board of Directors.