Stocks With Likelihood Of Corporate Exercise: TMC Life Sciences

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TMC Life Sciences Bhd
TMC Life Sciences Berhad (TMC) operates its flagship hospital and fertility centre, Tropicana Medical Centre in Kota Damansara and the TMC Fertility Centre in Damansara Utama, with branches located in Kepong, Puchong, Penang and Johor Bahru.

In August 2010, Singapore billionaire Peter Lim first acquired a 29.6% stake in the company. On 7 August 2014, he launched a mandatory takeover offer with offer price at 48 sen per share for the remaining 40.76% shares that he does not own. To date, Lim owns 76.57% of shares in TMC. Though this does not comply with Bursa’s listing requirement of having at least 25% public shareholding spread, Lim has expressed his intention to keep TMC listed and would rectify the public shareholding spread.

With Lim owning other hospitals in the region, most notably Singapore’s leading healthcare provider for obstetrics, gynaecology and paediatric services – Thomson Medical Centre, it would be interesting to see whether Lim would consolidate some of his Malaysian healthcare projects under TMC. Thomson Medical Centre Ltd was previously listed in Singapore, but privatised by Lim in 2010.

Notably, Lim is teaming up with the Johor royal family to build a USD1.6 billion medical themed integrated complex in Johor Bahru that will include a 200-bed hospital in the first phase, with supporting medical infrastructure, apartments and entertainment outlets.

TMC is currently trading at 57 sen, 3.4 times its book value of 16.9 sen, and a trailing 12-month P/E of 71.7 times. The company has net cash of RM 30.6 million.

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This article first appeared in The Edge Financial Daily, on October 15, 2014.