KLCI ang ang, red sea...
OSK Holdings' shareholders approve PJD, OSKP acquisitions
By Gho Chee Yuan / theedgemarkets.com | July 6, 2015 : 2:28 PM MYT
KUALA LUMPUR (July 6): OSK Holdings Bhd has obtained approval from its shareholders for the proposed acquisitions of two related property groups, namely OSK Property Holdings Bhd ( Financial Dashboard) and PJ Development Holdings Bhd (PJD) today.
The diversified group said the proposed acquisition is poised to unlock the value in the three listed entities, by creating a larger group with stronger financial position and enhancrd profitability in the long run.
Speaking to reporters after the company Annual General Meeting (AGM) today, OSK Holdings Group Managing Director and CEO Tan Sri Ong Leong Huat said the proposed merger is part of the group's strategic move to diversify its business portfolio into other viable areas, particularly property sector.
“The strategic move will ultimately enhance the profitability of the group and deliver higher value for shareholders,” he added.
“Upon completion of the exercise, we will emerge as a first tier property group in Malaysia, and we are believed the group will have stronger growth and enhanced sustainability going forward,” he said.
According to him, the group's profit contribution will likely remain unchanged, post merger.
Currently, the group derived some 40% of its earnings from the property and financial services segment, while another 20% comes from manufacturing and construction segment.
Ong also said the group will launch projects worth RM1 billion in Gross Development Value (GDV) within the next twelve months.
The projects, according to him, are located at Gohtong Jaya and Kuantan in Pahang, Cheras and Cyberjaya at the Central Region.
He expressed confidence in the Malaysian property market, despite the recent slowdown.
He also said the recent property slowdown will not trigger a property market bubble.
“Malaysia's property market is still relatively stable and the government is in the midst of building 2 million houses to cater to people needs,” he said.
Apart from that, Ong said the group will also focus on ”scalable business” that will provide better returns to shareholders.
However, he did not elaborate on what is the “scalable business” that the company is eyeing.
Recall that OSK Holdings is acquiring 73% of shares in OSK Property for RM346.4 million, or RM1.95 per OSK Property share.
Thw purchase consideration will be statisfied via the issuance of 177.64 million new shares, at RM1.95 each for the purchase.
OSK Holdings is also acquiring 31.6% of PJD for RM223.64 million or RM1.56 per share. The deal is to be satisfied via the issuance of 114.68 million new OSK Holdings shares at an issue price of RM1.95 per share.
Upon completion, OSK Holdings will make a voluntary takeover offer, involving acquisition of the rest of 310.46 million PJD shares not owned by OSK at RM1.56 per PJD shares.
The whole deal is targeted to be completed by early September.