Hong Kong Developer Drops $1.4 Billion Bid on 'Instability'

(Bloomberg) -- The escalating standoff over a controversial extradition bill in Hong Kong may have just claimed its first financial casualty.

Goldin Financial Holdings Ltd. is dropping its successful HK$11.1 billion ($1.42 billion) bid for a land parcel located in the Kai Tak area in Kowloon, Hong Kong, the company said in a filing to the city’s stock exchange Tuesday.

The firm convened an urgent board meeting Monday, where three executive directors and three independent directors voted to withdraw the tender. In voting against proceeding, the directors cited “recent social contradiction and economic instability” that would negatively affect Hong Kong’s commercial property market.

Goldin’s chairman, Pan Sutong, disagreed with his fellow board members. He voted to stick with the tender, saying the current situation wouldn’t affect the market’s long-term growth prospects. Pan also said that he was confident the acquisition would have brought significant synergies to the development of a nearby existing land parcel held by Goldin, and voted against the resolution.

Gao Min, an independent non-executive director, also voted against the resolution. But because a majority of the board voted for it, the bid was dropped. Goldin will forfeit a non-refundable deposit of HK$25 million paid to the Hong Kong government.

Hong Kong Developer Drops $1.4 Billion Bid on 'Instability'

The Hang Seng Properties Index slumped as much as 2.6% Wednesday, the most in almost six weeks. The broader benchmark was also lower as interbank interest rates jumped amid the unrest.

The city is bracing for rare strikes and continuing protests over proposed legislation that would allow extraditions to mainland China. Local companies have said they would suspend work or allow flexible office hours on Wednesday to accommodate workers planning to demonstrate near the city’s Legislative Council.

Opponents of the bill on Sunday staged one of the largest protests since the former British colony’s return to China: organizers said more than 1 million participants showed up, while police put the figure at 240,000.

©2019 Bloomberg L.P.

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