KUALA LUMPUR: Sime Darby Bhd is acquiring a 30% strategic stake in Eastern & Oriental Bhd for RM2.30 per share or RM766 million to extend its presence in the property development and hospitality sectors, beyond the Greater KL region, specifically in Penang and Johor.
Sime Darby said on Monday, Aug 29, it was acquiring 273 million E&O Shares and 60 million irredeemable convertible secured loan stocks (ICSLS) in E&O -- which on a fully diluted basis -- was about a 30% equity interest in the niche property developer.
Sime Darby will acquire the stake from E&O managing director Datuk Tham Ka Hon and several other major shareholders of E&O.
The statement confirms a report by the www.theedgemalaysia.com last Friday, Aug 26 that Sime Darby may acquire a 30% stake in E&O.
Bothe companies also entered into a three-year collaboration agreement to formalise a framework for their property development businesses.
Sime Darby said at RM2.30 per E&O share, the deal was valued at about a 20% discount to E&O’s estimated realisable net asset value (RNAV) of
Sime Darby president and group chief executive Datuk Mohd Bakke Salleh said the proposed acquisition would provide a springboard for the
conglomerate to expand its property business and the type of products it could offer.
“E&O is a distinctive brand in the industry and is synonymous with quality. We strongly believe that through collaboration and cross fertilisation of ideas and expertise, there are significant opportunities for synergies for both parties, thus creating value for our stakeholders,” he said.
Sime Darby said Tham would continue to helm E&O and its management team will remain unchanged.
Mohd Bakke said this would provide continuity in leadership and will ensure effective corporate succession planning.
Sime Darby said the potential opportunities for collaboration include the broadening of technical capabilities in innovation and product design, jointly exploring new market opportunities and developing new product offerings.
It said the collaboration would focus on:
(i) the sharing of knowledge and expertise;
(ii) the leveraging on each other’s respective core competencies; and
(iii) where mutually identified and on agreed terms, the exploitation of economic opportunities jointly.
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