KUALA LUMPUR: YTL Power International Bhd
’s 70%-owned subsidiary SIPP Power Sdn Bhd has agreed to a RM405.18mil deal for about 31.42% equity in Ranhill Utilities Bhd from Tan Sri Hamdan Mohamad and related entities Hamdan (L) Foundation and Hamdan Inc (Labuan) Pte Ltd.
This has triggered an unconditional mandatory takeover offer (MTO) for any remaining shares it does not already own it the water utility firm.
In a filing with Bursa Malaysia, YTL Power announced the unconditional share purchase agreement, which will see SIPP Power increase its equity interest in Ranhill to 34.32% from 2.9% at a purchase price of 99.5 sen a share.
Collectively, YTL Power and SIPP Power will have an aggregate direct shareholding in Ranhill of 53.19%, up from 21.77% previously, breaching the 50% threshold to trigger an MTO at an offer price of 99.5 sen.
The purchase consideration of 99.5 sen represents a 36.62% discount over the last traded price of Ranhill on May 27, 2024, and a 32.11% discount over its five-day volume weighted average market price up to the last trading day.
YTL Power said the acquisition and the MTO will be funded via internally generated funds.
According to YTL Power, the acquisition represents an opportunity to acquire a mature business operating in segments closely correlated with the group’s existing core competencies and will complement its utilities portfolio, both geographically and operationally.
“Based on the above and barring any unforeseen circumstances, the board believes that the transactions will contribute positively to the value of the group over the long term,” it said.
Barring any unforeseen circumstances, the acquisition is expected to be completed in June 2024 while the MTO is expected to be completed by the third quarter of 2024.
Meanwhile, Hong Leong Investment Bank Research said it viewed the acquisition positively.
“The acquisition price for Ranhill translates to a financial year 2025 price-to-earnings of 23.4 times, versus 9.1-10.3 times for YTL Power.
“However, on a price-to-book basis, it is lower at 1.6 times versus YTL Power’s 2.1 times.”
The research house expects potential synergistic benefits to integrate Ranhill into YTL Power’s diversified portfolio of businesses, while also leveraging YTL Power’s UK Wessex Water expertise.
