OSK succeeds in taking private PJ Development

OSK Holdings Bhd group managing director Tan Sri Ong Leong Huat

Trading in PJ Development to be suspended from tomorrow

PETALING JAYA: OSK Holdings Bhd’s long drawn-out effort to take private property developer PJ Development Bhd is finally bearing fruit with the latter filing to suspend trading of its shares from tomorrow.

The filing notification for the suspension was made on Friday with PJ Development saying that trading in its shares would be suspended five market days from the closing date of the takeover offer, following which the requisite steps would be taken to withdraw the company’s listing from the list of Bursa Securities.

OSK, controlled by Tan Sri Ong Leong Huat (pic), a seasoned stockbroker, had launched a second attempt at taking over PJ Development in September after failing last year. The first attempt at taking over PJ Development fell short of the 90% requirement for a compulsory acquisition. OSK had offered RM1.56 per share and 60 sen per warrant at the time.

The second offer valued the shares and warrants lower at RM1.50 per share and 50 sen per warrant. This offer saw the deadline extended twice after the original deadline of Oct 6 lapsed. It was extended to Oct 25 and then to Nov 21. By last Friday, OSK owned 95.4% of PJ Development shares.

The independent advisor, MIDF Investment Bank Bhd, said in a shareholders’ circular on Sept 30 that the unconditional voluntary take-over offer was “not fair” but “reasonable” and recommended that shareholders accept the offer.

OSK had earlier in a corporate exercise consolidated its property business via the merger of OSK Property Holdings Bhd with PJ Development, completed last December.

The rationale behind the takeover of PJ Development was for OSK to have a greater autonomy in reorganising the corporate structure, rationalising the business activities and streamlining the operations of the enlarged group of companies in order to achieve greater economies of scale and create cost-synergetic benefits.

“The delisting of PJ Development arising from the proposed offer is also expected to eliminate the administrative efforts and costs in maintaining the listing status of PJ Development and redivert resources towards its core businesses,” OSK said in the offer document.

It added that the offer was an opportunity for the shareholders and warrant holders of PJ Development who wished to realise their investments.

OSK had earlier replied to StarBiz saying that it could not reveal details of the reorganisation as the takeover was then ongoing.

Earlier reports said PJ Development, which also operates 10 hotels in Malaysia and one in Australia, was looking to divest three hotels in Pahang, Johor and Kedah for about RM200mil in total.

Reports said that the company preferred to focus on hotel management rather than ownership.

In terms of property projects, the company has a total of RM1bil in gross development value of projects with new sales targets of over RM1bil this year. There would also be 1 million sq ft of retal space for Kedah.

The company had earlier this year bought six parcels of land in Seremban totalling 312ha, which it plans to turn into an integrated residential and commercial development.

Property development remains the key contributor to PJ Development’s bottomline, contributing 52% to pre-tax profit, followed by construction and hospitality, each accounting for 13% of earnings.

The industries business, which makes cables and industrialised building systems, contributed 22%.

The company recorded a net profit of RM13.5mil on the back of RM374.3mil of revenue for the first half of this year. It has cash and cash equivalents of RM183.5mil as of June.

Meanwhile, for OSK, property development, construction, and industries contributed RM93mil to the total of RM139.6mil of the company’s first-half pre-tax profit.

The hospitality division saw a pre-tax loss of RM9.3mil.

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