UPS selling Sinotrans stake for HKD 462.5m

United Parcel Service has offered to sell its entire stake in Sinotrans for as much as HKD 462.48 million, further cutting its ties with the mainland courier service provider after buying out their express delivery joint venture in 2005.

UPS was selling 124.65 million Sinotrans shares at between HKD 3.56 and HKD 3.71 each, a 2 per cent to 6 per cent discount to the stock’s closing price of HKD 3.79 yesterday, according to a term sheet sent to fund managers.

The shares represent 7 per cent of the Beijing company’s issued H shares or 2.9 per cent of its total issued share capital. Citigroup was the sale arranger.

UPS, one of the world’s leading package delivery companies, bought the stake when Sinotrans went public in February 2003.

The two companies parted ways in 2005 when UPS paid USD 100 million to buy Sinotrans’ 50 per cent stake in their venture after Beijing opened the market to foreign firms under its World Trade Organisation accession commitments.

Sinotrans also has a venture with Deutsche Post, the parent company of DHL, which raised its stake in the mainland firm to 13.3 per cent from 11.3 per cent in December 2005.

The company formed an express airline joint venture this year with Korean Air Lines, the world’s largest international air cargo carrier, to tap the mainland’s growing exports.

Sinotrans, the listed flagship of state-owned China National Foreign Trade Transportation (Group), saw its net profit drop 28 per cent to 618.8 million yuan last year due to declining freight rates.

Shares of Sinotrans fell 3.81 per cent yesterday, closing at HKD 3.79. The stock had surged 22 per cent over the past three months on speculation its parent would inject more assets into the firm and eventually list the entire group.