Sime on acquisition trail

By C.S. Tan

Cash-rich Sime Darby Bhd is hot on the acquisition trail. It has made a bid for a controlling stake in Hyundai-Berjaya Corp Bhd (HBJ) and has also approached Jaya Holdings Ltd with an offer to take over the Singapore-listed oil and gas services company, sources said. 

Berjaya Group Bhd (BGroup) announced yesterday it had received an offer for its entire 40.3% interest in the shares and 47.7% interest in the warrants of HBJ. 

The offer was RM4.10 for each share in HBJ and RM3.20 for each warrant. BGroup said its board was considering the merits of the offer and it would announce its decision as soon as it had been made. It did not identify the party that made the offer but sources told StarBiz it was the Sime group. 

BGroup's controlling stake in HBJ would cost Sime about RM320mil at its offer prices for the shares and warrants. But Sime might eventually have to fork out more cash as it would have to make a general offer for the rest of the shares in HBJ; the final cost would depend on the number of acceptances. 

The acquisition, though, can easily be funded internally by Sime, which has about RM2bil cash. If successful, the acquisition would slightly reduce Sime's price/earnings (PE) multiple as it would be buying HBJ at a PE lower than its own. 

It is not known if the takeover would be undertaken by Sime itself or its motor subsidiary, Tractors Malaysia Holdings Bhd. HBJ is a logical target for Tractors, which has been downsized somewhat after it lost majority control of the wholesale franchise for BMW cars. 

HBJ, which has sales of about RM1bil a year, would beef up the Sime group's motor operations. 

Sime shares closed 10 sen lower at RM5.90 while Tractors inched up two sen to RM2.70 in a weak market yesterday. Trading in the shares of both BGroup and HBJ were suspended. 

It is understood that the 40.3% stake in HBJ that is being sought by Sime is held by several BGroup-related companies. They include Berjaya Capital Bhd (BCap), which is understood to hold a significant stake in HBJ. BCap shares rose three sen to RM1.13 yesterday. 

Sime's offer is considered favourable for BGroup as it is much higher than the cost of the securities the latter holds in HBJ. It is believed the value of BGroup's HBJ shares could be as low as RM1 each while the warrants were issued to it free in HBJ's rights exercise. 

The offer is also seen as favourable for HBJ as its share price is likely to be re-rated higher if the company comes under the wings of Sime, which is a blue-chip group. 

Meanwhile, it is learnt that Sime also has made overtures to Singapore's Jaya to take over that company. 

Jaya is in the same business as MSEB-listed Coastal Contracts Bhd, i.e the chartering of vessels to companies in the oil and gas industry, except that Jaya is five times bigger than Coastal Contracts. 

Jaya reported a net profit of S$33mil last year and has a market value of S$667mil. The stock closed unchanged at 89.5 Singapore cents yesterday. 

 Stock Watch On SIME Stock Watch On HBJCORP Stock Watch On BJGROUP

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