Bloomberg News

PNB Wants to Keep SP Setia Management After Proposed Buyout

October 10, 2011

(Updates with PNB’s comment in third paragraph.)

Oct. 10 (Bloomberg) -- Permodalan Nasional Bhd., Malaysia’s biggest state-asset manager, wants to retain SP Setia Bhd.’s Chief Executive Officer Liew Kee Sin and the existing management even after they dismissed its buyout offer as too low.

Hamad Kama Piah Che Othman, president of Permodalan or PNB, held talks with Liew on Oct. 7 and reassured him of his future, according to a joint statement today. SP Setia’s board said Sept. 29 that the 3.90 ringgit-a-share offer by PNB, the developer’s biggest investor, “fundamentally undervalues” the company and that they would seek competing offers.

“PNB fully appreciates the strong branding and deep- embedded value which has been created in the company through its entrepreneur-led management team,” according to the statement. “PNB recognizes that there is a disconnect between SP Setia’s fundamental value and its share price caused by the present global market turmoil which is why it is seeking to increase its stake in the company.”

PNB’s all-cash bid values SP Setia at 6.9 billion ringgit ($2.2 billion), making it potentially Malaysia’s largest property acquisition in at least two decades. Its offer translates to a price-earnings multiple of 19.8 times, compared with the Kuala Lumpur Property Index’s 9.8 times, making its bid “fair and reasonable,” PNB said on Sept. 30.

SP Setia fell 0.3 percent to 3.89 ringgit at 3:33 p.m. in Kuala Lumpur today. It has risen 18 percent over the past year, compared with a 5.9 percent top in the benchmark FTSE Bursa Malaysia KLCI Index.

General Offer

The asset manager made a general offer after raising its stake to more than 30 percent, it said. Liew is SP Setia’s third-largest shareholder with an 11.3 percent stake, according to data compiled by Bloomberg.

Hamad met Liew to “personally reassure him of PNB’s best intentions for SP Setia,” according to today’s statement. “PNB is an investment fund and its role is to look out for good companies to invest in and not to manage these companies.”

The developer has appointed AmInvestment Bank Bhd. as independent adviser.

Liew said in the statement he’s “heartened” by PNB’s reassurance and is committed to working closely with the board to secure the “best possible outcome” for investors.

--Editors: Linus Chua, Tony Jordan

To contact the reporter on this story: Barry Porter at bporter10@bloomberg.net

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


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