Thursday 28 Mar 2024
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KUALA LUMPUR: Property developer Plenitude Bhd has proposed a takeover of The Nomad Group Bhd for RM1.25 a share or RM278.84 million via an issuance of 111.53 million Plenitude shares at an issue price of RM2.50 per share.

Through its hotel segment, Nomad Group (fundamental: 1.05; valuation: 1.2) owns Novotel Kuala Lumpur City Centre, The Nomad SuCasa, GLOW Penang and The Nomad Serviced Residences Bangsar.

It also owns The Nomad Offices in Kuala Lumpur, Singapore, Ho Chi Minh City, Bangkok, Jakarta and Manila, covering over 194,700 sq ft of office space. However, the group is disposing of its assets and business of serviced offices to Regus Asia Pacific Management Ltd for RM22.3 million cash, which is expected to be completed by the first quarter of this year.

In a filing with Bursa Malaysia yesterday, Plenitude (fundamental: 2.7; valuation: 1.8) said under the proposed acquisition, Nomad Group shareholders will receive one Plenitude share for every two Nomad Group shares surrendered.

“Based on Nomad Group’s issued and paid-up share capital comprising 223.07 million shares as at the date of this announcement, the maximum number of Plenitude shares to be issued under the proposed offer is 111.53 million Plenitude shares, representing 29.2% of Plenitude’s enlarged issued share capital,” said Plenitude.

The offer would increase Plenitude’s issued share capital from 270 million to 381.53 million shares.

“This may result in a larger market capitalisation and may lead to higher trading liquidity for Plenitude shares. In turn, these will provide an avenue to attract more investor,” it added.

Plenitude said with the issuance of new Plenitude shares there will be no immediate need to raise cash up-front via borrowings to satisfy the offer.

Plenitude said the proposed offer represents an opportunity for the group to expand its hotel segment to diversify its earnings base and enhance its recurring income.

“For the financial year ended June 30, 2014, the hotel segment, which comprised solely Plenitude Group’s Four Points by Sheraton Penang hotel, contributed 4.13% of the group’s total revenue.

“With the company’s recent acquisition of The Gurney Resort Hotel & Residences (expected to be completed by the first half of 2015), the revenue contribution from the hotel segment is expected to grow further,” said Plenitude.

“Hence, in order to accelerate the growth of its hotel segment, Plenitude has identified the acquisition of existing hotels at suitable locations as the preferred strategy to drive its expansion plan,” it added.

Through the acquisition of Nomad Group, Plenitude expects its hotel segment to be given a boost with the addition of Nomad Group’s four hotel and hospitality assets. 

Following the acquisition, Plenitude does not intend to maintain the listing status of Nomad Group.

Plenitude also said it has no plan to dismiss or make redundant employees of the Nomad Group.

In a separate filing yesterday, Nomad Group said its board will deliberate Plenitude’s offer and decide whether to seek an alternate person to make a takeover offer for the offer shares.

The proposed acquisition is expected to be completed by the second quarter of this year.

 

This article first appeared in The Edge Financial Daily, on March 3, 2015.

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