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WCTE makes takeover bid for its property unit

RM503.6m offer for remaining 118.4m shares in WCT Land

IN KUALA LUMPUR

MALAYSIA’S civil engineering and construction firm WCT Engineering (WCTE) has made a voluntary takeover offer for the remaining 118.4 million shares of its 64.83 per cent property subsidiary WCT Land (WCTL) for some RM503.6 million (S$216.4 million).

The offer for WCT Land shares is at RM2.09 a share and to be effected on the basis of 0.524 new subdivided shares of WCTE at the issue price of RM3.985 per WCTE share.

As with an earlier proposal this week by the Eastern & Oriental (E&O) group to fold its property unit E&O Property into the group to form a single-tier entity in the RM609 million share-swap deal, WCTE also said it does not intend to maintain the listing status of WCTL.

The corporate exercises this week – albeit privatisation through a merger – reflect a trend of controlling shareholders to privatise and delist their property units, mainly because they are little traded and undervalued.

Khazanah Nasional decided to take UDA Holdings private last year via a cash offer, and since then state investment fund management company Permodalan Nasional has done likewise with two of its listed entities, Petaling Garden and Island & Peninsular. The Selangor state government’s Perbadanan Kemajuan Negeri Selangor is also in the midst of taking Worldwide Holdings private.

In WCTE’s case, it said the merger would complement its construction business, and rationalising WCTL’s resources would realise potential cost savings and operational efficiencies. Integrating its workforce would also allow it to expand its business by bidding for more construction and property developments nationally and internationally, added the company whose total orderbook now tops RM6 billion.

WCTE is one of Malaysia’s biggest players in the Middle East. Its projects there are beginning to contribute significantly to its earnings as evidenced by the 77 per cent year-on-year surge in its profit to just shy of RM39 million for the nine months to end-September on higher construction profits, analysts said.

WCTE has also offered to take over all WCTL’s registered debt securities not held by it amounting to some 61.3 million at the offer price of RM4.18 a share on the basis of 1.049 new subdivided WCTE shares. It owns the bulk of the registered debt securities which, if fully converted, would result in it increasing its stake in WCTL to 75.52 per cent.

WCTE’s takeover offer could result in the issue of up to 126.4 million subdivided WCTE shares worth RM503.6 million. Earlier this month, the company had proposed a share split of its RM1 share into 2 of 50 sen each. It expects the share split exercise to be completed before issuing the new subdivided WCTE shares pursuant to the takeover offer.

 

Source: Business Times 1 Dec 07

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