IOI Corp to buy out property arm

Planter IOI Corp Bhd plans to pay RM506 million, or RM2.60 a share in a cash-and-share deal to buy out IOI Properties Bhd before taking it private, the company said yesterday.

IOI Corp now holds 76 per cent of IOI Properties, and it has offered 33 sen cash and 0.6 new share for every share that it does not own in the builder.

The offer values IOI Properties at 0.66 time of its net assets per share of RM3.95 as at September last year.

IOI Corp will pay for the cash portion with internal funds or borrowings, the company said in a Bursa Malaysia announcement yesterday evening.

Analysts said IOI Corp can comfortably manage the cash offer since it is sitting on a cashpile of RM1.4 billion with net gearing of 46 per cent as of September last year.
"We believe privatisation would make sense given that IOI Properties is illiquid with 24 per cent held by minorities, of which close to 10 per cent is owned by state-linked funds like Valuecap and the Employees Provident Fund," Citigroup analyst Penny Yaw wrote in a report on Tuesday before the deal was announced.

"Moreover, IOI Properties is trading at a steep discount to its net asset per share of RM3.95," Citigroup said.

The privatisation was widely speculated after both companies requested for trading in their shares to be halted last Friday. Trading in both counters will resume today.

Shares of IOI Properties were last traded at RM2.22 before the trading suspension, while IOI Corp ended at RM3.92.

IOI Corp said a full control in IOI Properties will give it greater room to plot the future of the property arm and let it streamline the plantation and property business.

IOI Properties' public spread has also fallen below the 25 per cent required of a listed company since July last year, and the weak stock market has made it hard to rectify the shortfall, the company said.

The deal also allows IOI Properties investors to swap the illiquid shares into more actively traded IOI Corp, the company said.

The takeover still needs the authorities approval and IOI Corp shareholders' greenlight.

By Business Times (by Chong Pooi Koon)

IOI Corp to take property unit private

PETALING JAYA: IOI Corp Bhd has offered to buy out the remaining 199.7 million shares it does not already own in IOI Properties for about RM519mil.

IOI Corp plans to offer 33 sen in cash and 0.6 IOI Corp shares at an issue price of RM3.78 each for the remaining stock, according to a statement from IOI Properties.

The proposal by IOI Corp to take its property unit private values IOI Properties at RM2.598 a share, which is 17% higher than its last traded price of RM2.22 on Jan. 30.

In a statement to Bursa Malaysia yesterday, IOI Corp said “the offer was in line with the group’s intention to obtain full control of its property unit by making it a wholly-owned subsidairy.”

Trading in shares of IOI Corp and IOI Properties were suspended on Tuesday.

Both stocks will resume trading today.

TA Securities analyst Steven Tan said the offer price of RM2.598 was relatively unattractive because its was below TA’s valuation of nine times price to earnings ratio for the property sector and below IOI Properties’ revised net asset value (RNAV).

He pointed out that the offer price was equivalent to about 7.7 times IOI Properties’ financial year 2009 earnings per share, 0.67 times its net tangible asset and 0.52 times it RNAV of RM5.

However, Tan advised minority shareholders to accept the offer.

“IOI Corp would eventually privatise IOI Properties without any hassle, as the company have already owned a 76% stake in IOI properties, exceeding the 75% public spread requirement,” he told StarBiz.

CIMB Research analyst Ivy Ng said the offer price was “good” for IOI Corp’s shareholders, as it represented a discount of about 0.66 times its price-to-book ratio.

By The Star (by K.C.Law)