Razer execs put $4.5 billion value in take private deal

A consortium led by Razer Inc’s top executives is planning to value the Hong Kong-listed gaming hardware maker at up to HKUS$35 billion (US$4.5 billion) in a deal to take it private, two people with direct knowledge of the matter said.

Chairman Min-Liang Tan and non-executive director Kaling Lim, with a combined stake of nearly 60per cent in Razer, are leading a group to offer up to HKUS$4 per share for the deal, the people said. That is almost double Razer’s average share price of HKUS$2.1 over the past month.

The move comes as the consortium believes Razer, based in the United States and Singapore, has been undervalued in Hong Kong where investors typically pay more attention to tech firms from mainland China, the people added, declining to be identified due to confidentiality constraints.

Razer declined to comment. Tan and Lim also declined to comment on a Reuters query made via the company.

Razer shares jumped as much as 23per cent in afternoon trading on Tuesday after the Reuters report. It was up more than 10per cent at 0521 GMT.

In late October, a company filing said Tan and Lim were in preliminary talks with financial investors to explore the possibility of a transaction involving the company which may or may not lead to a general offer for its shares.

The consortium is also in talks with private equity firm CVC Capital Partners for the buyout, said one of the two people and two other people with knowledge of the matter.

Buyout firm KKR has also studied the deal but has yet to decide on whether it will invest, said the first two people and another person.

KKR declined to comment. CVC did not immediately respond to a request for comment.

The talks have advanced and the consortium is looking to announce the deal by end-2021, the first two people said.

The consortium aims to eventually list Razer in New York to take advantage of higher valuations for tech stocks, the first two people told Reuters.

Razer performance
Founded in the United States and Singapore in 2005, Razer has grown from making wireless mice to manufacturing gaming laptops, gaming keyboards and other accessories.

It swung to a record net profit of US$31.3 million in the first half of 2021, riding a gaming boom as COVID-19-related lockdowns kept people at home, compared to a net loss of US$17.7 million a year earlier. The United States accounted for 42per cent of its first-half revenue.

Razer went public at HKUS$3.88 per share in the Asian financial hub in 2017, in a stellar debut powered by strong retail demand for new technology stocks.

But its stock more than halved last month from this year’s peak of HKUS$3.36 in February, while the benchmark Hang Seng Index fell 24per cent over the same period.

However, the shares have jumped 30per cent to five-month highs since the October filing on Tan and Lim’s talks with investors.

A transaction would add to a surge in strategic investors and buyout firms tapping Hong Kong companies for take-private opportunities, attracted by undervalued shares.

Hong Kong-listed firms have been involved in US$8.15 billion worth of take-private deals in 2021, versus US$23 billion for all of last year, Refinitiv data showed. Reuters