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Thursday, May 15, 2008

Boustead Properties poised to go private

CONGLOMERATE Boustead Holdings Bhd - which has investments in the financial, plantation, property and shipping sectors - plans to make a buyout offer for its property arm.

Details of the takeover offer for Boustead Properties Bhd will be announced today, the company told Bursa Malaysia Bhd yesterday.

While it is still too early to see how the deal will benefit Boustead, analysts agreed that the buyout makes sense.

"Any buyout could allow Boustead Holdings to gain control of Boustead Properties' cashflow. Boustead Properties has a free cash flow of about RM200 million a year, based on 2007 numbers.

"From the amount, only RM40 million went to Boustead Holdings through dividend. Strategically, it is a good move, but we still need more details to see if it is a good deal," said HLG Securities research manager Ridzuan Mohamed.

Trading in shares of both Boustead and Boustead Properties were suspended yesterday.

Boustead, which holds 63.3 per cent of the property company, may pay at least RM434 million to buy the remaining shares. This is based on Boustead Properties' last traded share price of RM4.64.

"Earnings potential for Boustead Properties is quite good, so it makes sense for them to take it private. But at the end of the day, it all depends on the valuation," said TA Securities analyst James Ratnam.

Shares of Boustead have taken a beating this year, falling some 19 per cent, which is worse than the market's 11 per cent drop during the same period.

Boustead Properties is also one of Boustead Holdings' most valuable unit as it is rich in assets. Its shares also offer a dividend yield of over six per cent.

It developed the fast-growing Mutiara Damansara project; owns commercial properties like Wisma Boustead, Menara Boustead, Menara Affin, The Curve and Cineleisure Damansara (50 per cent owned).

It also has a 25 per cent stake in Al-Hadharah Boustead REIT, which in turn has 10,500ha of mature plantation land. It also owns and manages the Royal Bintang hotels.

The property developer is expected to make more money from its Mutiara Damansara township as prices reach RM380 per sq ft. It was barely RM150 per sq ft five years ago.

It is launching 470 units of condominiums in Mutiara Damansara, worth some RM200 million.

Boustead Properties will also launch a RM2 billion mixed-development project on a 280ha site in Bukit Raja, Klang, by mid-2009. It plans to sell the land now and to build the township next year.

By New Straits Times (by Goh Thean Eu)

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