Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 23): WZ Satu Bhd has aborted its RM368 million proposed acquisition of Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (Silk), the operator of the Kajang Silk Highway, from SILK Holdings Bhd.

It told the stock exchange in a filing today that the termination of the deal was due to a failure to reach an agreement on the terms of the definitive agreement with SILK Holdings.

"Accordingly, WZ Satu and SILK Holdings had today mutually agreed, by way of an exchange of letters between their respective solicitors, not to proceed with the proposed acquisition," the steel maker turned construction outfit said in the filing.

WZ Satu said the termination of the heads of agreement (HoA) is not expected to have any material effect on its earnings for the financial year ending Aug 31, 2017 (FY17).

Recall that WZ Satu announced it had inked the HoA with SILK Holdings for the acquisition of a 100% stake in Silk for RM368 million in June this year.

"It is the intention of WZ Satu to acquire Silk together with other co-investor(s) to be identified, on the basis that WZ Satu will be the majority shareholder," it said in the June filing.

WZ Satu said the purchase consideration will be satisfied via cash of RM239.25 million and the issuance of 125 million shares in WZ Satu at an issue price of RM1.03 per share.

The 37-km Kajang Silk Highway links Balakong, Sungai Long, Kajang, Bangi, Serdang and Putrajaya. The concession contract will end in July 2037.

WZ Satu is the third company to have expressed an interest to acquire Silk only to see the deal fall through.

In May 2014, IJM Corp Bhd proposed to acquire Silk for RM398 million cash, but the deal was called off mutually following the non-fulfilment of certain conditions precedent within the agreed timeline.

The next to express interest, in September last year, was Taliworks Corp Bhd, which owns a 55% stake in Cerah Sama Sdn Bhd, the concessionaire for both the Cheras-Kajang Highway and New North Klang Straits Bypass Expressway.

In May, Taliworks chief investment officer Kevin Chin Soong Jin said the company hoped to close the deal within the next few months.

"There are some terms that need to be finalised, which include toll hikes in October (2015). The traffic volume has come down after the hike. This is one of the factors we need to consider when we work out the purchase price," Chin said then.

However, Taliworks decided not to proceed with the acquisition.

Shares in WZ Satu closed two sen or 1.98% higher at RM1.03 today, for a market capitalisation of RM347.23 million.

 

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