This article first appeared in The Edge Financial Daily on January 3, 2018
KUALA LUMPUR: Philippine-listed Ayala Land Inc will invest RM202.5 million to raise its stake in MCT Bhd to 50.19%, which will trigger a mandatory takeover offer for the remaining shares at 88 sen per share.
The takeover price is a 12.8% premium over MCT’s last traded price of 78 sen yesterday before trading of its shares was halted at 2.49pm for one hour with a 6% premium over the stock’s closing price of 83 sen, with a market capitalisation of RM1.1 billion.
Ayala Land said the increase in ownership of MCT will provide it with greater opportunity to take advantage of the growth potential and long-term prospects of the real estate sector in Malaysia and will affirm Ayala Land as a key player in the Asean property sector.
In a filing with Bursa Malaysia yesterday, MCT said it has received a letter of notification from Regent Wise Investments Ltd (RWIL), a wholly-owned subsidiary of Ayala Land, that it had entered into a conditional share purchase agreement (SPA) with MCT’s non-executive director Tan Sri Goh Ming Choon to acquire 230.12 million shares or a 17.24% stake in MCT for RM202.5 million in cash or 88 sen per share.
Upon completion of the proposed acquisition, RWIL’s shareholding in MCT will increase from 32.95% to 50.19%.
Upon fulfilment of the condition precedent under the SPA, RWIL will be obliged to extend a mandatory takeover offer to buy the outstanding shares in MCT for 88 sen per share as its shareholding crosses the 33% threshold.
“The condition precedent involves obtaining a waiver from Bursa Malaysia Securities Clearing Sdn Bhd to allow for 51% of the cash consideration to be settled in tranches to the vendor,” said MCT.
MCT added that it will appoint an independent adviser upon receipt of the notice of the offer to advise the board of directors and shareholders.
This confirmed a report by The Edge Malaysia weekly in July last year, saying Ayala was planning to tighten its grip on MCT by buying a controlling stake from the group’s co-founders — Goh and Datuk Seri Tong Seech Wi.
The article also mentioned that the acquisition would lead to a mandatory general offer (MGO).
However, MCT had then denied the report, saying “there is no discussion among shareholders for a MGO or buyout”.
In a separate filing with the Philippines Stock Exchange, Ayala Land chief financial officer Augusto D Bengzon said the increase in ownership of MCT will strengthen Ayala Land’s commitment to enhance MCT operations and expand its business further.
“With Ayala Land’s solid track record in developing large-scale, integrated, mixed-use and sustainable estates across the Philippines and in growing its diversified product lines, we believe it is in a highly capable position to boost the performance and enhance the value of MCT.”
MCT chief executive officer Jose Juan Z Jugo told The Edge Financial Daily in an email yesterday that the group will have greater access to the best practices, procedures and expertise of its major shareholder, Ayala Land, upon completion of the proposed acquisition.
“This will allow MCT to better tap into Ayala’s vast experience and knowledge in property development, as we work on achieving our own goals in Malaysia. With one of Asean’s largest property developers as our controlling shareholder, I expect MCT to evolve much better and much faster in the local market,” he said.
Jugo also said Ayala’s decision to increase its shareholding is a “clear signal” of the latter’s confidence in MCT.
“Ayala Land is determined in expanding its presence regionally, and it has chosen to make us a bigger part of that mission. As a subsidiary of Ayala Land, our internal goals will have to support the overall objectives of our parent company. Being part of a much larger and much older organisation can only bring good things to MCT as we ourselves move towards growth in Malaysia.”
MCT was listed on the Main Market of Bursa Malaysia in April 2015 following a reverse takeover of GW Plastics Holdings Bhd, whose core business was sold to industrial packaging maker Scientex Bhd.
Ayala Land surfaced as a substantial shareholder in MCT with a 9.17% stake in April 2015, and raised its interest to the current 32.95% in October 2015.
For the first financial quarter ended Sept 30, 2017 (1QFY18), MCT’s net profit fell 34.3% to RM10.55 million from RM16.06 million a year ago. Revenue dropped 39.4% to RM94.04 million from RM155.27 million in 1QFY17, as most of the projects were nearing the completion stage and there were no new launches in the current quarter under review.
The property development segment contributed 87% of the group’s total business in 1QFY18.