KUALA LUMPUR (July 27): Batu Kawan Bhd acquired a 2.4% stake in Malay-Sino Chemical Industries Sdn Bhd from its own major shareholder, Wan Hin Investments Sdn Bhd, for RM17.7 million.
Wan Hin is an investment holding company, owned and controlled by Tan Sri Lee Oi Hian, Datuk Lee Hau Hian, their siblings and their respective family members. It is also the major shareholder of Batu Kawan with about 48.96% stake, thus making the deal a related party transaction.
Malay-Sino is a private limited company and an 86%-owned subsidiary of Batu Kawan as at July 10 this year. Its principal activity is the manufacturing and sale of caustic soda, hydrochloric acid, liquid chlorine and other by-products.
As at July 10, Wan Hin holds about 2.4% stake in Malay-Sino.
A filing with Bursa Malaysia said the rationale of the deal was to provide an opportunity for Malay-Sino's minority shareholders including Wan Hin, which owns the majority of Batu Kawan's shares, to sell their investment in Malay-Sino, in view that Malay-Sino is a private limited company and there is illiquidity in its shares.
It also added that the offer would allow Batu Kawan to increase its shareholding and control in Malay-Sino.
The other minority shareholders, 42 in total, collectively own 11.1% of Malay-Sino.
The note filed with Bursa also said the purchase consideration is based on the offer price of RM9 per Malay-Sino share made by Batu Kawan to all the Malay-Sino's minority shareholders.
It is based on Malay-Sino's audited group's net profit of RM84.6 million for its latest financial year ended Sept 30, 2016, which is equivalent to earnings of RM1.02 per share and its expected future earnings capacity. Malay-Sino also has an audited group net asset of RM459.02 million or RM5.53 per share as at Sept 30, 2016.
"Thus, the purchase consideration, which is calculated based on RM9.00 per Malay-Sino share, represents a price-earnings ratio of 8.8 times on Malay-Sino's group earnings and a price-to-book value ratio of 1.6 times its group net assets," it said.
As of closing, Batu Kawan slipped 26 sen or 1.35% to RM18.94, giving it a market capitalisation of RM7.64 billion.