IOI Corp to take property unit private

Posted on | February 5, 2009

By THE STAR

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.

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