by RAHIMI YUNUS / pic by TMR FILE
BATU Kawan Bhd is proposing to acquire a 56.32% equity interest in Chemical Co of Malaysia Bhd (CCM) from Permodalan Nasional Bhd (PNB) and Amanahraya Trustees Bhd for RM3.10 a share or RM292.79 million cash.
According to an exchange filing yesterday, Batu Kawan stated that the purchase price was reached on a willing-buyer willing-seller basis after taking into consideration the historical and prevailing market prices of CCM shares, audited consolidated net assets of CCM as at Dec 31, 2019, of about RM322.77 million, and the earnings potential of CCM and its subsidiaries.
The purchase price of RM3.10 a share values the company at RM516.8 million, and the offer price represents a premium of 13.14%, or 36 sen, over the last transacted price and volume-weighted average market price of CCM shares up to and including Nov 16, 2020, of RM2.74.
Batu Kawan also tabled a notice of the mandatory takeover offer for all the remaining ordinary shares in CCM not already owned by the company and persons acting in concert at RM3.10 a share.
PNB president and group CEO Ahmad Zulqarnain Onn (picture) in a statement said the proposed divestment is part of PNB’s asset diversification strategy to rebalance the portfolio.
He said the CCM sale is consistent with PNB’s efforts to enhance value and deliver sustainable returns to unitholders continuously.
“A robust sale and price discovery process was conducted by our advisor, Maybank Investment Bank Bhd, and we are pleased that the final sale price represents a significant premium to the market price,” Ahmad Zulqarnain said in the statement yesterday.
PNB said the price represents a 69% premium to the three-month volume-weighted average share price and triggers a mandatory general offer.
“We greatly value the trust and confidence that our unitholders have placed in us to generate returns and we will continue to work and act in their best interests. As custodians to the wealth of millions of Bumiputera and Malaysian unitholders, PNB is always guided by our mandate in all investment decisions and remains committed to the highest standards of conduct in delivering returns to our unitholders,” Ahmad Zulqarnain added.
CCM is principally involved in the manufacturing and marketing of chlor-alkali and polymers chemicals.
Under the chlor-alkali segment, the group manufactures chlorine, caustic soda, hydrochloric acid, sodium hypochlorite and polyaluminium chloride, which are used mainly in water treatment, rubber gloves, oleochemical, oil and petrochemical, electronics and textile industries.
The group is a leading supplier of these chemicals in Malaysia and exports to several countries within South-East Asia.
Additionally, CCM also manufactures calcium nitrate, which is an important component of rubber glove manufacturing as it is used for latex coagulation.
The proposed acquisition is expected to benefit Batu Kawan as an opportunity to acquire an established chemicals and polymers manufacturer; increase Batu Kawan’s market presence as a chlor-alkali chemicals manufacturer; and an opportunity to unlock value through the realisation of operational efficiencies in logistics, distribution and procurement.
Subject to the fulfilment of the condition precedent, the proposal is expected to be completed by the first quarter of next year.
Batu Kawan’s share price ended 1.15% or 18 sen higher yesterday at RM15.82, giving it a market valuation of RM6.32 billion.