Bloomberg News

Malaysia’s SP Setia Gets Takeover From PNB at 21.5% Premium

September 28, 2011

(Updates with pricing of offer in second paragraph.)

Sept. 28 (Bloomberg) -- SP Setia Bhd., Malaysia’s biggest listed developer by sales, said shareholder Permodalan Nasional Bhd. made an offer to take over the company in the country’s largest property acquisition in at least two decades.

Permodalan or PNB, Malaysia’s largest state asset manager, offered 3.90 ringgit apiece for the rest of the shares it doesn’t already own, Maybank Investment Bank Bhd. said in an e- mailed statement today. The all-cash bid values SP Setia at 6.9 billion ringgit ($2.2 billion). The stock surged 13 percent to 3.50 ringgit yesterday, the most since 1998, before being suspended from trading today.

The offer represents a premium of 21.5 percent above SP Setia’s five-day volume-weighted average price of 3.21 ringgit, said Maybank, which is acting for PNB. This compares with an average premium of 34 percent for 17 property deals of more than $500 million in Southeast Asia in the past five years, according to data compiled by Bloomberg.

“If it’s privatized, it would imply that Permodalan might do some internal consolidation and put all their property assets under one entity,” said Jason Chong, who helps manage about $1 billion as chief investment officer at Manulife Asset Management (Malaysia) Sdn. in Kuala Lumpur. They also need to “ensure that core management is still around.”

The offer follows PNB’s 2009 merger of three developers after buying them out. Kuala Lumpur-based SP Setia will give PNB, which manages about 150 billion ringgit of assets, access to projects in Malaysia, Australia and Vietnam.

Listing Status

PNB intends to maintain the listing status of SP Setia, according the bank. If the takeover results in the public shareholding spread being less than 25 percent, the asset manager will explore options to rectify the spread, Maybank said. SP Setia Chief Executive Officer Liew Kee Sin owns 11.3 percent of the company, according to data compiled by Bloomberg.

“It is not in PNB’s interest to have SP Setia taken private,” said Nik Hazim Nik Mohamed, who helps manage 2.2 billion ringgit of funds in Kuala Lumpur at Kenanga Investors Bhd., which holds SP Setia shares. “They do not want to kill an entrepreneur.”

SP Setia had sales of 2.3 billion ringgit in the first 10 months of its current financial year that ends in October, and has a target of 3 billion ringgit, the company said on Sept. 22. The developer posted a 4.6 percent growth in net income to 91.2 million ringgit in the third quarter ended July 31.

Raised Stake

The asset manager bought Island & Peninsular Bhd. for 670.5 million ringgit and Petaling Garden Bhd. for 477 million ringgit in 2007. It took over Pelangi Bhd. two years earlier, and said at the time that it was seeking ways to “maximize” returns, including a possible initial share sale.

PNB raised its stake in SP Setia to 33.2 percent yesterday, exceeding the 33 percent threshold that requires the buyer to extend a general offer, Maybank said in the statement.

Recent property tie-ups in the country include Malaysian businessman Jeffrey Cheah merging earlier this year two property and construction companies he controlled, citing the necessity to create scale to bid for bigger projects in the nation and overseas. The 4.5 billion ringgit merger was the biggest property takeover in Malaysia in the past 20 years before today’s announcement, according to data compiled by Bloomberg.

Sime Darby Bhd. announced on Aug. 29 the purchase of a 30 percent stake in property developer Eastern & Oriental Bhd. for 766 million ringgit to expand into the northern Penang and southern Johor states, while state-controlled UEM Land Holdings Bhd. made a 1.4 billion-ringgit takeover of smaller rival Sunrise Bhd.

--With assistance from Joyce Koh and Grant Clark in Singapore and Elffie Chew in Kuala Lumpur. Editors: Linus Chua, Barry Porter

To contact the reporters on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net; Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc in Hong Kong at apapuc1@bloomberg.net


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