MMCCORP (2194) - MMC Corp acquiring 49% stake in Penang Port for RM200m
In a filing with Bursa Malaysia today, MMC said it has entered into an agreement with Seaport Terminal to acquire 35.99 million shares in PPSB. It will fund the acquisition via internal funds and/or bank borrowings.
The deal is deemed a related party transaction as Seaport Terminal, which is involved in the development and management of port facilities, is a major shareholder of MMC with a 51.76% stake as at March 15, 2016. Seaport Terminal is a wholly-owned subsidiary of Indra Cita Sdn Bhd, which is owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary.
It is also deemed a related party transaction as MMC directors Datuk Seri Che Khalib Mohamad Noh and Datuk Ooi Teik Huat are also directors of PPSB.
The RM200 million purchase consideration was arrived at after taking into the consideration the estimated fair market value range of Penang Port by Deloitte Corporate Advisory Services Sdn Bhd, which was estimated to be in the range of RM348.1 million to RM445.1 million.
MMC said the valuation was solely based on the port services, and is with the assumption that the ferry business will not be part of PPSB's business on the completion of the proposed 49% acquisition.
The share sale and purchase agreement is subject to, among others, the execution by PPSB of the agreement to dispose of its ferry service business, comprising the assets including vessels, employees, costs and liabilities associated to the buyer of the ferry business.
It is also subject to Seaport Terminal or PPSB obtaining the written approval and/or confirmation of no objection from the government.
The proposed acquisition is expected to be completed in the first quarter of 2017.
MMC said the 49% acquisition is in line with the initiative of the group to make further strategic investments in one of its core businesses, which is ports and logistics division, and strengthen its financial performance and position.
"It is also expected that the proposed 49% acquisition would contribute positively to the future earnings of the MMC group.
"In addition, the acquisition will bode well for the MMC group in its effort to maintain its position as a key player in the ports industry in Malaysia as well as to provide a good opportunity for the group to establish its foothold in PPSB, a prominent port company located in the northern part of Peninsular Malaysia," the group said.
MMC added that PPSB is currently undertaking a transformation programme to turn the port around to be more competitive and profitable.
"The transformation programme includes reducing operation cost, increasing port efficiency, providing additional services for cargo handling activities as well as continuous port infrastructure development in line with industry demand.
"Key initiatives undertaken by PPSB include gaining further market share in cargo and transshipment segment, capturing untapped market potential, offering higher value added activities and developing general cargo business," said MMC.
Penang Port is the oldest and longest established port in Malaysia. The port serves as the main gateway for shippers in the northern states of Malaysia and the southern provinces of Thailand.
It is equipped to handle all types of cargo such as containers, liquid bulk, dry bulk and break bulk, and provides a multitude of services to cater for their safe and efficient transit via the port's various terminals and facilities.
MMC shares closed up 2 sen or 0.91% to RM2.22 today for a market capitalisation of RM6.76 billion.
MMCCORP (2194) - MMC Corp acquiring 49% stake in Penang Port for RM200m
http://www.theedgemarkets.com/my/article/mmc-corp-acquiring-49-stake-penang-port-rm200m
