KUALA LUMPUR (June 2): DRB-Hicom Bhd is buying the remaining 49% equity stake in Media City Ventures Sdn Bhd (MCV) from its controlling shareholder Tan Sri Syed Mokhtar Albukhary for RM100 million cash.
The diversified group already owns a 51% stake in MCV, which it bought from the tycoon four years ago at the price tag of RM85.68 million.
Upon completion of the proposed acquisition, DRB-Hicom said its total cost of investment for 100% equity interest in MCV would be RM185.68 million, which is within the market value of between RM167.40 million and RM248.86 million.
DRB-Hicom announced to Bursa Malaysia that it has entered into a share sale and purchase agreement with Enigma Permata Sdn Bhd (EPSB) to acquire the remaining 49,000 shares it does not own in MCV.
As at May 28, Arsad Mat Jali and Azman Hanafi Abdullah are the shareholders and directors of EPSB, holding 50% stake each.
According to a filing to the exchange, one of the owners of EPSB — Azman — is deemed a person connected to Syed Mokhtar, whose 90%-owned vehicle Etika Strategi Sdn Bhd holds a 55.92% stake in DRB-Hicom.
Additionally, DRB-Hicom said its chairman Datuk Mohammad Zainal Shaari and its non-independent non-executive director Sharifah Sofia Syed Mokhtar Shah are also deemed to be persons connected to Syed Mokhtar. Hence, the duo will abstain from deliberations and voting at the relevant board meetings in relation to the proposed acquisition, said DRB-Hicom.
MCV is an investment holding company and has a wholly-owned subsidiary, Media City Holdings Sdn Bhd, which in turn wholly owns Media City Development Sdn Bhd (MCDSB).
MCDSB is principally engaged in construction, operation and maintenance of infrastructure and broadcast system via a concession agreement it entered into with the government on March 20, 2012 to undertake the privatization of the development of new office buildings including broadcasting studios and auditorium for the Ministry of Information Communication and Culture (MICC) for a period of 23 years.
DRB-Hicom said the proposed acquisition will enable it to fully consolidate the financial returns of MCV Group from the concession and lease agreements and the potential profitable returns from the development of the exchange land within the medium term.
MCV Group’s net profit after taxation (PAT) for the nine months ended Dec 31, 2019 stood at RM25.82 million and its net assets amounted to RM182.70 million.
For the three-month period ended March 31, 2020, MCV’s net PAT is RM12.05 million and its net assets stood at RM194.75 million.
The proposed acquisition is not expected to have any material impact on the group for the financial year ending Dec 31, 2020 (FY20), said DRB-Hicom, adding that the proposed exercise is also not expected to have any impact on the group’s gearing for FY20 as it will be funded via DRB-Hicom’s internally generated funds.
Barring unforeseen circumstances, the proposed acquisition is expected to be completed this month.
Shares of DRB-Hicom closed three sen or 1.89% higher at RM1.62 today, valuing the company at RM3.13 billion. Year-to-date, the counter fell 31.93% from RM2.38.