Boustead buys Irat stake at a higher price of RM199m

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KUALA LUMPUR: Boustead Holdings Bhd has acquired a 50% stake in Irat Properties Sdn Bhd for RM199 million cash, which will see the conglomerate invest in the government’s automated enforcement system (AES).

The purchase sees Boustead taking up 93.33 million Irat shares, which represent half of the latter’s issued share capital.

Last month, Boustead (fundamental: 0.65; valuation: 2) proposed the purchase at a lower price of RM127.8 million for a subscription of 60 million new Irat shares, which represent 50% of the company’s issued shares for RM2.13 apiece.

In a filing with Bursa Malaysia yesterday, the group said it had subscribed to 60 million new Irat shares for RM127.8 million, as well as an additional 33.33 million new Irat shares for RM71 million.The remaining 50% interest in Irat is held by Lembaga Tabung Angkatan Tentera (LTAT) (49.17%) and Irat Holdings Sdn Bhd (0.83%).

In a separate statement, Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said the strength of the group is premised on its strong fundamentals and diversified nature. “In line with this, we expect our entry into the automated enforcement segment to prove beneficial to the group in the long term,” said Lodin.

The statement noted that the sale and purchase agreement (SPA) for the proposed acquisition of ATES Sdn Bhd by Irat has become unconditional yesterday and the proposed acquisition of Beta Tegap Sdn Bhd is currently pending the fulfilment of the conditions precedent to the SPA.

In February this year, Irat entered into two conditional SPAs to fully acquire ATES and Beta Tegap. The price tags for both the acquisitions were not disclosed.The two companies are engaged in the operation of the AES and hence, the proposed acquisition will see Boustead getting involved in the AES which will be jointly managed by the conglomerate and its largest shareholder LTAT.

Lodin also said that the acquisition is viable and will strengthen the group’s earnings potential. “We are especially positive about our prospects in the property sector given the fact that this acquisition includes two properties in Kuala Lumpur, namely the Chulan Tower office block and The Royale Chulan Hotel Kuala Lumpur valued at a total of RM508 million.”

 

This article first appeared in The Edge Financial Daily, on April 15, 2015.