Amcorp wants a better deal on Kesas sale

KUALA LUMPUR: Amcorp Properties Bhd, which is controlled by banker Tan Sri Azman Hashim, wants to deliberate further with Gamuda Bhd on the latter’s RM250 million cash offer to buy its 20% stake in Kesas Holdings Bhd.

A filing with Bursa Malaysia yesterday said that Amcorp would negotiate with Gamuda on the terms of its offer dated Nov 4.

The announcement is perceived that Amcorp is not satisfied with the offer, probably wanting a higher price. However, Amcorp, in which Azman owns a 72.41% equity interest, could not be reached for comment at press time.

Gamuda concurrently approached the Selangor State Development Corp and Permodalan Nasional Bhd to acquire their 30% and 20% stakes in Kesas.

Gamuda, the largest intra-urban expressway concessionaire, holds 30% of the highway concession company Kesas, which owns and operates the 34.5km three-lane Kesas Highway.

Its offer to all three entities amounts to RM875 million in cash and remains open until next Monday, unless Gamuda agrees to an extension.

The offer requires approvals from other related parties such as the government.

Alliance Research reported last week that the price implies a discount of 10% to the research house’s free cash flow to equity valuation for Kesas.

It said that the discount is justified as any asset acquisition must yield a reasonable rate of return for the acquirer.

JF Apex Securities and Kenanga Research also called the bid positive for Gamuda, saying that the offer price tag was 24% to 25% lower than their valuations of Kesas.

JF Apex added that the bid was surprising as Gamuda was seeking to divest its stake in local highway concessions earlier on.

A sound deal for Gamuda may possibly mean the vendors are not being offered the best price for the highway concession.

JF Apex believes that Gamuda is probably deploying a different strategy to unlock the value of its toll assets and to position itself to initiate a business trust involving toll concessions: Lingkaran Trans Kota Sdn Bhd (Litrak), Sistem Penyesuaian Trafik KL Barat (SPRINT), and Stormwater Management and Road Tunnel (SMART). The research outfit views that Gamuda’s acquisition is likely to pave way for that.

Amcorp yesterday reported its net profit plunged 80.5% to RM2.8 million for the second financial quarter ended Sept 30 from RM14.2 million in the corresponding period last year.

Revenue fell 20.5% to RM23.9 million from RM30.1 million a year ago. The property division contributed RM10.6 million and the engineering and infrastructure division contributed RM13.3 million.

Other factors contributing to the decline in profit include a drop in other operating income and higher administration, finance, and operating costs.

This article first appeared in The Edge Financial Daily, on November 15, 2013.


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