By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 30 2011
Sime Darby Bhd, the world's largest listed palm oil producer by acreage, is buying 30 per cent of Eastern & Oriental Bhd (E&O) for RM766 million to expand its portfolio in property development and hospitality, beyond Greater Kuala Lumpur.
At RM2.30 per E&O share, the deal is valued at about a 20 per cent discount to E&O's estimated realisable net asset value (RNAV) of RM3.2 billion.
But it is also 54 per cent more than E&O's closing price of RM1.49 yesterday.
Prior to the announcement, some E&O shareholders have been raising their stakes in the company.
This month alone, Tan Sri Azman Hashim, GKG Investment Holdings Pte Ltd and Datuk Azizan Abd Rahman bought shares in E&O totalling 5.3 million, 1.25 million and 100,000 shares, respectively.
Late last month, E&O deputy managing director Eric Chan told Business Times that the management was not in any acquisition talks with any parties, when asked if some of the shareholders were about to exit the company.
However, E&O issued a statement on the planned disposal by its major shareholders on Sunday.
It said that managing director Datuk Tham Ka Hon and his associates had entered into a share sale agreement with a wholly-owned unit of Sime Darby to sell 108 million shares or 12.2 per cent of E&O, and 38 million units of irredeemable convertible secured loan stocks (ICSLS).
Upon completion, Tham and his associates will continue to hold 29 million E&O stocks and 27.1 million ICSLS. He will end up with 5.1 per cent of E&O if he converts all of his ICSLS.
Sime Darby said in a statement yesterday that it is buying 273 million E&O shares and 60 million ICSLS.
Its president and group chief executive officer Datuk Mohd Bakke Salleh said the proposed acquisition will provide a springboard for the conglomerate to expand its property development activities and the products it could offer, especially in Penang and Johor.
E&O has several projects and the largest is the 392ha Seri Tanjung Pinang seafront development in Penang. It has pockets of land at Jalan Kia Peng and Jalan Yap Kwan Seng in Kuala Lumpur, 145ha at Gertak Sanggul in Penang, and bungalow lots in Damansara Heights.
Sime Darby said Tham will continue to helm E&O and its management team will remain unchanged.
"This would provide continuity in leadership and will ensure effective corporate succession planning," Mohd Bakke said.
In addition to that, both companies have also entered into a three-year collaboration agreement to formalise a framework for their property development businesses.
Mohd Bakke said the potential opportunities for collaboration include the broadening of technical capabilities in innovation and product design, jointly exploring new market opportunities and developing new product offerings.
"E&O is a distinctive brand in the industry and is synonymous with quality. We strongly believe that through collaboration and cross fertilisation of ideas and expertise, there are significant opportunities for synergies for both parties, thus creating value for our stakeholders," he said.
-ENDS-
sharen@nstp.com.my
Published in NST on August 30 2011
Sime Darby Bhd, the world's largest listed palm oil producer by acreage, is buying 30 per cent of Eastern & Oriental Bhd (E&O) for RM766 million to expand its portfolio in property development and hospitality, beyond Greater Kuala Lumpur.
At RM2.30 per E&O share, the deal is valued at about a 20 per cent discount to E&O's estimated realisable net asset value (RNAV) of RM3.2 billion.
But it is also 54 per cent more than E&O's closing price of RM1.49 yesterday.
Prior to the announcement, some E&O shareholders have been raising their stakes in the company.
This month alone, Tan Sri Azman Hashim, GKG Investment Holdings Pte Ltd and Datuk Azizan Abd Rahman bought shares in E&O totalling 5.3 million, 1.25 million and 100,000 shares, respectively.
Late last month, E&O deputy managing director Eric Chan told Business Times that the management was not in any acquisition talks with any parties, when asked if some of the shareholders were about to exit the company.
However, E&O issued a statement on the planned disposal by its major shareholders on Sunday.
It said that managing director Datuk Tham Ka Hon and his associates had entered into a share sale agreement with a wholly-owned unit of Sime Darby to sell 108 million shares or 12.2 per cent of E&O, and 38 million units of irredeemable convertible secured loan stocks (ICSLS).
Upon completion, Tham and his associates will continue to hold 29 million E&O stocks and 27.1 million ICSLS. He will end up with 5.1 per cent of E&O if he converts all of his ICSLS.
Sime Darby said in a statement yesterday that it is buying 273 million E&O shares and 60 million ICSLS.
Its president and group chief executive officer Datuk Mohd Bakke Salleh said the proposed acquisition will provide a springboard for the conglomerate to expand its property development activities and the products it could offer, especially in Penang and Johor.
E&O has several projects and the largest is the 392ha Seri Tanjung Pinang seafront development in Penang. It has pockets of land at Jalan Kia Peng and Jalan Yap Kwan Seng in Kuala Lumpur, 145ha at Gertak Sanggul in Penang, and bungalow lots in Damansara Heights.
Sime Darby said Tham will continue to helm E&O and its management team will remain unchanged.
"This would provide continuity in leadership and will ensure effective corporate succession planning," Mohd Bakke said.
In addition to that, both companies have also entered into a three-year collaboration agreement to formalise a framework for their property development businesses.
Mohd Bakke said the potential opportunities for collaboration include the broadening of technical capabilities in innovation and product design, jointly exploring new market opportunities and developing new product offerings.
"E&O is a distinctive brand in the industry and is synonymous with quality. We strongly believe that through collaboration and cross fertilisation of ideas and expertise, there are significant opportunities for synergies for both parties, thus creating value for our stakeholders," he said.
-ENDS-
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