SP Setia gets offer in Malaysia’s biggest real estate takeover in 20 Years

Permodalan or PNB, Malaysia’s biggest state asset manager, will “extend a conditional takeover offer,” the developer said in a statement today, without giving details of the bid. The Edge newspaper said today the shares may be bought close to yesterday’s closing price of 3.50 ringgit, citing a person familiar with the matter who wasn’t identified.

The acquisition follows PNB’s 2009 merger of three property companies, Island & Peninsular Bhd., Pelangi Bhd. and Petaling Garden Bhd., after taking them private. SP Setia will give PNB, which manages about 150 billion ringgit ($48 billion) of assets, access to projects in Malaysia, Australia and Vietnam.

“If it’s privatized, it would imply that Permodalan might do some internal consolidation and put all their property assets under one entity,” Jason Chong, who helps manage about $1 billion as chief investment officer at Manulife Asset Management (Malaysia) Sdn. in Kuala Lumpur. They also need to “ensure that core management is still around.”

SP Setia has a market value of 6.2 billion ringgit, based on yesterday’s close. The stock surged 13 percent yesterday, the most in 13 years, before it was suspended from trading today.

Acquisitions

SP Setia recorded sales of 2.3 billion ringgit in the first 10 months of its current financial year to October, and has a target of 3 billion ringgit in property sales, the company said on Sept. 22. The developer posted a 4.6 percent growth in net income to 91.2 million ringgit in the third quarter ended July 31.

The asset manager bought Island & Peninsular for 670.5 million ringgit and Petaling Garden for 477 million ringgit in 2007. It took over Pelangi Bhd. two years earlier, and said at the time that it was seeking ways to “maximize” returns, including a possible initial share sale.

The latest buyout also comes after several property-related tie ups in the country.

Sime Darby Bhd. (SIME) announced on Aug. 29 the purchase of a 30 percent stake in property developer Eastern and Oriental Bhd. for 766 million ringgit to expand into the northern Penang and southern Johor states.

State-controlled UEM Land Holdings Bhd. made a 1.4 billion- ringgit takeover of smaller rival Sunrise Bhd. Malaysian businessman Jeffrey Cheah merged two property and construction companies he controlled earlier this year, citing the necessity to create scale to bid for bigger projects in the country and overseas.

To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net; Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net

To contact the editor responsible for this story: Barry Porter at bporter10@bloomberg.net