MALAYSIAN Resources Corp Bhd (MRCB) made known its intention to make a general offer for the shares in UDA Holdings Bhd yesterday. It did not, however, reveal how much it would offer for the shares.
Managing director Shahril Ridza Ridzuan said the company's advisers would work out a detailed scheme for the proposed takeover.
The company has appointed Newfields Advisors Sdn Bhd and RHB Sakura Merchant Bankers Bhd as joint advisers for the exercise.
Shahril added at a media briefing that he wanted to declare MRCB's intentions with respect to UDA as there had been a lot of speculation in the press and the stocks involved.
“We want to make clear our stance to make an offer for all the shares not already owned by us,” he said. MRCB currently owns about 25% of UDA, so that its offer is for the 75% balance.
Shahril hopes to be able to present detailed terms of the offer “as soon as possible.”
Analysts say the offer would probably involve a share swap – it is unlikely to be a cash offer as MRCB is not a cash-rich company.
Would UDA shareholders want to swap their UDA shares for MRCB shares? It depends on the share-exchange ratio, an analyst said.
The offer would have to be attractive enough to secure the acceptance of UDA's shareholders, which include Khazanah Nasional, the largest shareholder. .
At the same time, MRCB's board has to be able to justify the deal to its own shareholders. That would be easy, the analyst said, as the offer would be below UDA's net tangible assets (NTA) of RM3.28 at the end of last year.
Even though the offer would be at a discount to NTA, it is expected to be significantly above UDA's share price in recent months or years. This would be the carrot for UDA's shareholders.
Shahril said if the takeover succeeded, the combined MRCB-UDA group would own 6,000 acres land and 4 million sq ft of commercial properties. The exercise would create “the largest government-linked urban property group,” he added.
Referring to MRCB's existing 25% stake in UDA, he said it was a matter of public record that its cost was RM2.50 a share.
MRCB had bought that stake from Landas Utama Sdn Bhd, a company owned by UDA's top executives, in 2003, according to records.
Shahril said MRCB's prime KL Sentral project and the Seri Iskandar township project in Perak would keep the group busy for many years. Even so, it was looking to a takeover of UDA to enhance its business base.
According to Shahril, other reasons for the proposed takeover include eliminating conflicts of interest (when both MRCB and UDA consider new projects), consolidating UDA's earnings and assets into MRCB and an option to float UDA's investment properties through a real estate investment trust.
The shares of both MRCB and UDA will be requoted today. The shares were last traded at 74.5 sen and RM2.07 respectively.
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