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Merge Housing receives takeover offer

KUALA LUMPUR: Property development player Merge Housing Bhd has received a conditional takeover offer from its major shareholders in a privatisation exercise worth RM48.3 million.

According to the announcement on Bursa Malaysia, managing director Lee Kuang Chong and his two brothers Lee Fatt Chong and Lee Heng Choong are collectively offering 65 sen per share for the remaining shares they do not collectively own to be settled in cash.

The three brothers currently hold a total of 75.8 million shares in Merge, which represents a 52.37% stake in the company. Merge has a share base of 150 million shares, and a market cap of RM91.5 million. After the exercise is completed, the brothers do no intend to maintain the listing status of the company.

Merge's share price had been trending upwards since the beginning of the week. The counter closed at 55 sen last Friday, but closed at 60 sen Monday. Merge's share price ended yesterday at a 12-month high of 61 sen. The counter had been trading at an average of 52.3 sen over the past year.

With a net loss of RM24.3 million for FY09 ended May 31, the company managed to turn around in FY10 with a net profit of RM1.1 million. Merge was in the red for the first nine months of FY11, reporting a net loss of RM1.7 million as revenue fell sharply to RM26.9 million from RM84.9 million for the period.

According to the notes accompanying the announcement, the decrease was due to the slowdown in progress and the lack of new launches. In its FY10 annual report, the company had been working to improve its financial position by disposing of non-core assets. This included the sale of land in Puchong worth RM80.5 million.

The company also stated that it erred on the side of caution for FY10 by not aiming for significant sales launches but rather completing its existing projects. In the annual report, Merge said that its focus would be its Subang 2 land.

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