This article first appeared in The Edge Financial Daily on November 28, 2019

KUALA LUMPUR: Widad Group Bhd, whose parent company Widad Business Group (WBG) has put in a bid to take over toll concession PLUS Malaysia Bhd for RM5.3 billion, continues its acquisition trail with the purchase of Menang Corp (M) Bhd’s concession business for RM122 million cash.

The concession, which manages UiTM Seremban 3 campus in Negeri Sembilan, is housed under Menang subsidiary Inovatif Mewah Sdn Bhd.

The acquisition comes one month later following its announcement on buying a 90% stake in Serendah Heights Sdn Bhd, the owner of the concession to develop and maintain the UiTM campus in Jasin, Melaka, for RM95.89 million.

According to Widad, the latest acquisition will give the company an additional integrated facilities management (IFM) concessionaire worth RM838 million, bringing its total order book to about RM3 billion.

“The cash consideration for the purchase of Innovatif Mewah shall be raised from a combination of internally generated funds and bank borrowings. It (the acquisition) represents a strategic opportunity for us to further strengthen our IFM segment which is currently the biggest revenue contributor for the company at about 50%,” said Widad group executive chairman Datuk Feizal Mustapha.

Menang announced to Bursa Malaysia that a heads of agreement was executed yesterday between Widad Group and Innovatif Mewah shareholders which are Menang’s two wholly-owned subsidiaries — Menang Development Sdn Bhd (MDSB) and Menang Industries (M) Sdn Bhd (MISB) plus a minority shareholder, Tentu Selesa Sdn Bhd.

Under the agreement, MDSB and MISB will dispose of their 71% equity interest in Innovatif Mewah, while Tentu Selesa will let go of its 29% stake, subject to terms and conditions of a share sale and purchase agreement which will be entered later.

The announcement confirms The Edge Malaysia weekly’s report earlier, quoting sources as saying that Menang Corp is in talks with parties to sell its concession businesses.

With the effective 71% stake, Menang is expected to receive RM86.62 million from the divestment, or 18 sen per share based on the share capital of 480.8 million.

Menang, via Inovatif Mewah, built and managed the UiTM Seremban 3 campus in Negeri Sembilan under the concession agreement signed in May 2010. The concession has 14 years before it expires in 2034.

Menang said its board believes the proposed disposal is timely and “provides the group with an opportunity to monetise its concession asset at a reasonable price”.

The proposed disposal, expected to be completed within seven months, will help strengthen the company’s financials by lowering its gearing and providing future working capital. Its total borrowings were RM254.66 million as at June 30, of which RM207.9 million were long-term debts.