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Wednesday, October 12, 2011

SP Setia's major shareholders seeing eye to eye

KUALA LUMPUR: The major shareholders of SP Setia Bhd have appeared to patch up their differences, after a joint statement by both the property developer and Pemodalan Nasional Bhd (PNB), say analysts.

This has also meant that SP Setia chief executive officer (CEO) Tan Sri Liew Kee Sin is now less likely to seek a higher takeover bid.

"Market talk was that PNB and Liew did not see eye to eye on some issues, particularly on PNB's intention to have more say in the company. The statement yesterday certainly squashed market rumours and addressed the concerns of investors, employees and business partners.

"With the statement, it is also less likely that Liew will be seeking for higher bidders, as this may not look professional," said a research head from a local brokerage.

Early this week, PNB in a statement, said it wants Liew to remain at the helm of SP Setia and the existing management team to continue to manage the company. It added that "it is committed, once markets stabilise, to maintain an appropriate shareholding spread with the capacity to attract not just local but also foreign institutional funds and retail participation".

Liew, in the statement, added that he was "heartened" by the reassurance from PNB president Tan Sri Hamad Kama Piah.

To recap, about two weeks ago, PNB announced a conditional takeover offer for SP Setia, which involves PNB buying SP Setia shares it does not own for RM3.90 a piece and warrants it does not own for 91 sen each.

The takeover bid, which appears to be hostile, was immediately rejected by Liew on the same day, saying that the offer undervalues the company. He asked PNB to reconsider higher offer and said it will seek offers from rival bidders.

The takeover is conditional upon when PNB receives more than 50 per cent of shareholders accepting the offer.

Since PNB's announcement, the group has increased its shareholding from about 33.2 per cent to about 38 per cent in SP Setia, mainly via the open market.

However, interestingly, it appears that PNB's acquisition from the open market has slowed lately.

This week, SP Setia's average daily trading volume is about one million shares a day. In contrast, between September 29 and October 7, its average trading volume was 15 million shares a day.

"It is now likely that investors will just sit out for the time being while waiting for the independent advice circular to be out," said an analyst.

By Business Times

New condo? No, it’s an office block

SINGAPORE: With their swimming pools, gyms and immaculate rooftop gardens, they could almost be mistaken for executive condominiums.

In fact, they are office buildings in industrial estates – part of a new breed of developments designed to provide a stylish workplace for young entrepreneurs keen to get the creative juices flowing.

Gone are the days when their firms had to settle for space in staid grey blocks alongside small factories. Instead, developers say they are concentrating on aesthetics and recreational facilities, which help them to attract tenants such as start-ups run by bosses who want somewhere “cool” to do business.

Take Bizhub 28 @ Chai Chee. Due to be completed in 2013, it will have a pool, barbecue pits and a gym. Seah Yam Seng, the property agent in charge of selling the office space, said it was attracting mainly foreign firms and new tech businesses.

“It’s the lifestyle,” he said. “Some local companies may be happy with just an office space to work in but, nowadays, tenants do demand a little more.”

Oxley BizHub is another trendy development, this time aimed at light industry companies or those that produce small consumer goods. The developer of the Ubi Road 1 project, which is due to be completed in 2013, said it was not interested in slapping together a simple design.

Oxley Rising chief executive Ching Chiat Kwong said: “We believe that injecting a bit of ‘lifestyle’ into our projects encourages people to be more productive at work. It helps to have a lot of greenery and a nice area to work in.”

He added that the concept was likely to catch on fast with developers who realised their customers expected modern features.

Oxley paid S$158.1mil, or S$169 per sq ft (psf), for the Oxley BizHub 60-year leasehold plot in August last year. Since its launch, the property has sold its 728 units at an average S$677 psf. Prices there are said to be higher than those at other 60-year leasehold properties in the area, which go up to slightly over S$400 psf.

While the building’s design sets it apart from others in the neighbourhood, property agent Benson Koh said prices at the project depended just as much on the economy.

“Whether or not the price can be justified will depend on market demand,” he said. “The recent cooling measures on residential property have driven a lot of investors to buy units in industrial projects, so demand is very high right now.”

The move to add more frills to office buildings is also catching on in downtown developments. Asia Square, in the Central Business District, will have a 32,300-sq-ft gym and a fully sheltered landscaped plaza where tenants can relax, socialise or hold corporate events.

Existing office buildings equipped with facilities like these include Capital Tower and One George Street, both of which have pools managed by Fitness First. Capital Tower even has an indoor golf club on its ground floor. CapitaLand, which developed both buildings, said it wanted to provide its tenants with a balanced environment for work and play.

When IT consultancy Acian Technologies decided to set up its new office at the futuristic Fusionopolis in Buona Vista in 2007, the building’s design, gym and roof garden were a major draw. “It’s great for the employees to visit the garden, and it helps us when we are recruiting staff,” said chief executive Julien Arnaud, 33. “I’m a member of the gym, and I usually drop by in the morning or after work.”

Wesley Oxenham, director of design at technological firm Peekspy, said he planned to move his office somewhere “cooler”. Right now, his company is based in an older industrial building.

“I visited the Google offices in Singapore a few years ago, and I was quite inspired by the way they did the place up,” said the 28-year-old. “It’d be nice if the office building and the interior were well designed. It could help us think in a more innovative way.”

By Straits Times Singapore

Sunway in JB and Singapore projects

PETALING JAYA: Construction and integrated property developer and manager Sunway Bhd has been awarded a contract worth RM308.9mil from Iskandar Malaysia Studios Sdn Bhd for the construction of an integrated media studios facility in Johor Baru.

In a statement to Bursa Malaysia, Sunway said that its wholly-owned subsidiary Sunway Construction Sdn Bhd had received the letter of award for the project.

Called Pinewood Iskandar Malaysia Studios, work on the project would take 19 months for completion by May 10, 2013.

Among other things, the project would comprise a TV block, with two TV studios and two scene docks; a film block with five studios; an annex block with a viewing theatre and audience-holding area; a production block, with offices, dressing room and wardrobe studio; and ancillary building and space, with a guard house, carpark and a 10-acre backlot for filming.

The project is expected to contribute positively to the earnings of Sunway group from financial year ending Dec 31, 2012 onwards.

In a separate announcement, Sunway said that Sunway Developments Pte Ltd, together with Hoi Hup Realty Pte Ltd and Oriental Worldwide Investments Inc, had been awarded the tender for a piece of land in Jalan Loyang Besar/Pasir Ris Rise, Singapore for a 99-year lease term at S$140.96mil (RM345mil).

Sunway Developments, a wholly-owned subsidiary of Sunway Construction, would set up a joint-venture company with Singapore-based Hoi Hup and Oriental World based on a 30:60:10 equity ratio to undertake the development of the land.

The proposed development is expected to complete within 60 months, commencing Oct 10.

By The Star

Sunway to develop land in Singapore

SUNWAY Bhd won a RM345 million tender from the Urban Redevelopment Authority of Singapore to develop a piece of land in Jalan Loyang Besar, Singapore.

Sunway’s partners in the venture are Hoi Hup Realty Pte Ltd and Oriental Worldwide Investments Inc.

By Business Times

E&O mandatory general offer unnecessary

PETALING JAYA: In a move market observers said was not unexpected, the Securities Commission (SC) has concluded that Sime Darby Bhd does not need to make a mandatory general offer (GO) for shares in Eastern & Oriental Bhd (E&O).

In separate announcements to Bursa Malaysia, Sime Darby and E&O said the SC had found that Sime Darby and Datuk Terry Tham Ka Hon were not parties acting in concert and as such a mandatory offer obligation would not arise.

The SC also told Sime Darby that its finding was without prejudice to a review of the decision should new facts arise and it was the regulator's right to take appropriate action provided under the securities laws as a consequence of such review.

Trading in Sime Darby and E&O shares was suspended yesterday till 2.30pm pending the announcement on the SC's decision.

The news comes after more than a month of speculation over the implications of Sime Darby's acquisition of a 30% stake in niche property developer E&O for RM2.30 per share, a 60% premium to its then market price.

In a statement, the SC said: “In the course of the review (of the circumstances of the acquisition), parties involved in the transaction were interviewed and relevant documents procured. The review included an assessment of possible concert party relationships between and among the parties involved. Precedents in Malaysia and practices and rulings in other jurisdictions on similar issues were also examined.

“Having analysed all the evidence gathered, it is the SC's finding that the acquisition of the 30% equity interest in E&O by Sime Darby had not given rise to a mandatory offer obligation under the Malaysian Code on Take-Overs and Mergers 2010.”

Besides Sime Darby and the three vendors from whom it had bought the 30% interest, the other name in the spotlight was E&O chairman Datuk Azizan Abd Rahman, who had purchased 450,000 shares on the open market in five separate transactions from April to August this year, with the last purchase of 100,000 shares done on Aug 12 about two weeks before Sime Darby announced its acquisition.

Azizan is also SC chairman Tan Sri Zarinah Anwar's husband. She recused herself from the review as a result.

Although the SC has said a GO was not necessary, the review of all stock transactions by all parties of E&O shares is still ongoing.

Sime Darby's purchase, coming just under the 33% threshold that would have required it to launch a GO, had sparked much debate in the market and consternation among minority shareholders of E&O.

After both companies resumed trading, Sime Darby shares hit a high of RM8.68 before settling at RM8.50, 1.19% above its closing price on Monday. E&O shares, meanwhile, traded mostly below their previous close and ended 1.45% lower at RM1.36.

Analysts said the SC's decision came as no major surprise. Speaking to StarBiz, a Sime Darby analyst said the outcome was more or less expected by industry watchers. He said the news would not significantly impact Sime Darby and did not warrant a change in his valuations.

Hong Leong Investment Bank Research said in a report that it was positive on the development as it would mean Sime Darby does not have to acquire the remaining 70% of E&O at a GO price that was much higher than E&O's market price.

Another analyst pointed out that the bigger concern for Sime Darby was crude palm oil (CPO) prices as the conglomerate derived some 58% of its operating profit from its plantation business. Sime Darby is the world's largest listed palm-oil producer by acreage.

CPO prices have come under pressure after the Malaysian Palm Oil Board released figures on Monday that showed supply was getting ahead of demand, as palm oil stockpiles jumped 12.17% in September from August against an 8.8% drop in exports.

As for E&O, analysts anticipate its share price could face some selling pressure because the prospect of a GO has diminished.

An analyst reckoned that E&O shares might touch RM1.20 on the disappointment of investors who bought into it expecting a GO.

By The Star