CapitaLand set to gain 100% of CMA under compulsory acquisition

[SINGAPORE] CapitaLand has cleared the final hurdle in its bid to gain 100 per cent control of shopping malls unit CapitaMalls Asia (CMA). It has accumulated a large enough stake to be able to force-buy any remaining shares it does not own when the offer closes at 5.30pm today.

Last Friday, CapitaLand's stake in CMA crossed the 97.02 per cent threshold required for it to compulsorily acquire all the CMA shares it does not already own. This was a day after CapitaLand hit the 90 per cent stake threshold it needed to delist CMA.

CapitaLand said yesterday that as at 5pm last Friday, shareholders holding about 15.7 per cent of CMA's issued share capital had accepted its offer to buy CMA at $2.35 a share. This brought CapitaLand's total stake in the malls unit to 97.1 per cent.

CMA shareholders whose valid acceptances are received by 5.30pm today will be paid within 10 days from the date of receipt. Any remaining CMA shareholders who do not accept the offer will receive a letter from CapitaLand about the compulsory acquisition of their stock.

CMA will also be suspended from trading on both the Singapore and Hong Kong bourses tomorrow, pending delisting.

This brings to a close the privatisation bid that CapitaLand first launched on April 14 at a lower offer price of $2.22.

CapitaLand wanted to delist CMA - which manages 105 shopping malls worth about $34.3 billion - to simplify the group's organisational structure and make its business units more nimble in reacting to opportunities for integrated projects.

But shareholders voiced their unhappiness that the first offer price was just 4.7 per cent above CMA's initial public offering price of $2.12 when it was listed in 2009.

However, the independent financial adviser to the deal found the offer to be "fair and reasonable", since CapitaLand was already CMA's majority shareholder with a 65.3 per cent stake when it launched the bid, and no change of control would result.

Even so, after a closed-door discussion that the Securities Investors' Association (Singapore) (SIAS) organised between shareholders and CapitaLand's management, CapitaLand decided to better its offer, hiking the offer price to a final one of $2.35 a share.

That new price is at a 31.5 per cent premium to the last traded price on April 11 before the bid was launched, up from the 23 per cent premium implied by the initial $2.22 price.

For CapitaLand's shareholders, the deal will be immediately earnings accretive, raising its return on equity to 6.7 per cent from 5.4 per cent.