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KUALA LUMPUR (Nov 18): Chemical Company of Malaysia Bhd (CCM) share price rose more than 7% in morning trading today after Batu Kawan Bhd yesterday announced the latter’s proposed acquisition of a stake Estimated 56.32% in CCM and a takeover offer for the remainder. CCM shares at RM3.10 each.
At 9:01 am today, CCM was 20 sen or 7.17% higher at RM2.99.
The stock saw some three million shares traded. At the offer price of RM3.10 per share, CCM would be valued at RM519.87 million based on the company’s 167.7 million issued shares.
Yesterday, Batu Kawan said that the proposed acquisition will involve the purchase of 94.45 million shares of CCM.
“Upon completion of the proposed acquisition, Batu Kawan’s stake in CCM will increase from zero to approximately 56.32% equity stake in CCM.
“Consequently, in the event that the proposed acquisition becomes unconditional, pursuant to article 218 (2) of the Capital Markets and Services Act of 2007 and paragraph 4.01 (a) of the Rules on Acquisitions, Mergers and Mandatory Acquisitions, Batu Kawan will be obliged to extend the proposed [takeover] offer at a cash offer price of RM3.10 per CCM share, ”said Batu Kawan.
Meanwhile, Batu Kawan said that yesterday he signed a conditional stock purchase agreement with Permodalan Nasional Bhd (PNB) and AmanahRaya Trustees Bhd as trustee of Amanah Saham Malaysia, Amanah Saham Bumiputera and Amanah Saham Bumiputera 3-Didik unit trust funds (known collectively as sellers) in connection with the proposed acquisition of CCM’s stake.
CCM said in a separate Bursa Malaysia filing that upon completion of the sellers’ proposed divestiture of CCM’s stake, the sellers will cease to be CCM shareholders.
Today, Hong Leong Investment Bank Bhd (HLIB) analyst Low Jin Wu wrote in a note that the research house believes that Batu Kawan has made a very generous offer as the offer price of RM3.10 far exceeds HLIB’s previous CCM stock target price (TP). of RM1.47.
“We advise investors to accept the offer,” Low said.
According to the Batu Kawan website, the company was incorporated in 1965 and began operating as a plantation company when it took over the assets and liabilities of its UK predecessor company, Batu Kawan Rubber and Coconuts Plantations Ltd, in 1971 under a reconstruction plan.
Batu Kawan said that over the years it had diversified from its main plantation business to manufacturing industrial chemicals.
“In 1992, the company sold all its plantation assets to Kuala Lumpur Kepong Bhd (KLK) in exchange for shares. KLK is the company’s largest investment, in which it currently owns a 47% stake.
“In 2015, Batu Kawan, through its subsidiary Caruso Australia Ventures Pty Ltd, ventured into residential property development investments in Australia. These development projects are located in the cities of Melbourne and Perth, and are managed by real estate developers. Established professional Australians. ” Batu Kawan said.
PNB, owned by the Malaysian government, said on its website that over the past four decades, PNB had grown to become one of Malaysia’s largest fund management companies.
In a statement yesterday, PNB said that the divestment of CCM’s stake had undergone rigorous due diligence and a multi-layered governance process to ensure it meets PNB’s strict investment policies and objectives.
“This divestment is part of PNB’s asset diversification strategy to rebalance its portfolio and is consistent with our efforts to continually improve value and deliver sustainable returns to our shareholders,” said PNB Chairman and Group Chief Executive Ahmad Zulqarnain Onn, in the statement.
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