KUALA LUMPUR (July 14): Doh family-linked Lagenda Properties Bhd (KL:LAGENDA) and Epicon Bhd (KL:EPICON) have proposed a RM543.16 million deal that will transform Epicon into Lagenda’s construction platform.
In separate Bursa Malaysia filings, the two companies said under the proposed transaction, Epicon will acquire a 60% stake in Lagenda’s construction subsidiaries, Rantau Urusan (M) Sdn Bhd (RUSB) and LPB Construction Sdn Bhd (LPBC).
The acquisition will be satisfied through the assumption of RM125.82 million in related-party debt, the issuance of 1.86 billion new Epicon shares worth RM241.43 million and 1.35 billion Class A redeemable convertible preference shares (RCPS A) worth RM175.91 million. Both securities will be issued at RM0.13 each.
Following completion of the acquisition and related corporate exercises, Lagenda will become Epicon’s controlling shareholder with a 62.79% stake, while Lagenda and its related parties will collectively hold about 73.34% of Epicon.
The transaction strengthens the Doh family’s links with both companies. Lagenda managing director Datuk Doh Jee Ming is a key shareholder of Lagenda, holding an indirect 58.336% interest through Lagenda Land Sdn Bhd and Doh family vehicle Doh Properties Sdn Bhd. He owns 90% of Doh Properties, which is a substantial shareholder of Epicon.
Doh Properties currently owns a 10.68% stake in Epicon and 233 million RCPS. It has undertaken to convert all its RCPS into Epicon shares before completion of the acquisition, increasing its direct stake to 34.86% and its collective stake with related parties to 36.25%.
The increase above the 33% threshold would normally trigger a mandatory general offer (MGO), but Doh Properties will seek an exemption from the Securities Commission Malaysia, subject to approval from Epicon’s independent shareholders. Lagenda will also seek a similar exemption after its shareholding increase triggers an MGO obligation.
The acquisition values RUSB and LPBC at RM905.26 million based on an independent valuation. The two construction companies have a combined outstanding order book of RM1.24 billion and will give Epicon access to Lagenda’s RM10.28 billion property development pipeline.
As part of the agreement, Lagenda has provided a profit guarantee that RUSB and LPBC will generate a combined RM238 million profit after tax (PAT) for FY2027 and FY2028, comprising RM110 million in FY2027 and RM128 million in FY2028.
To protect Epicon, 1.098 billion Epicon shares issued to Lagenda will be held as security and released only if the profit targets are achieved. Any shortfall must be compensated by Lagenda through the pledged shares or cash.
Epicon will also receive an option to acquire the remaining 40% stake in RUSB and LPBC for up to RM362.11 million. The option can be exercised within 30 months after the profit guarantee is determined, subject to Bursa Malaysia requirements. The payment may be made through cash, new Epicon shares and/or RCPS A.
If exercised fully, Epicon will take full ownership of both construction companies. However, the option consideration will be adjusted if RUSB and LPBC fail to achieve the agreed profit targets.
Epicon will carry out a private placement of 240 million new shares to raise RM31.2 million, representing 8.11% of its enlarged share capital after the proposed corporate exercises. The shares will be issued at RM0.13 each to four independent investors — Binari Maju Sdn Bhd, JMJ Mega Bina Sdn Bhd, Teoh Wei Sheng and Matthew Kong Len Ern — who are not related to Epicon’s directors or major shareholders. The proceeds will be used mainly to support Epicon’s financial position, including working capital and transaction-related expenses, with the new shares to be listed on Bursa Malaysia’s Main Market.
The new Epicon shares will only be issued after the conversion of existing RCPS held by Doh Properties in Epicon and the completion of the private placement. The RCPS A will be issued afterward and may be converted into Epicon shares in the future, subject to Bursa Malaysia rules.
The shares in RUSB and LPBC will be transferred to Epicon free of any restrictions or claims, giving Epicon full rights over its 60% ownership.
Epicon and Lagenda will also enter into shareholders’ agreements to set out how the two construction companies will be managed and operated after the acquisition.
The restructuring will allow Lagenda to focus on property development while positioning Epicon as the group’s construction arm. The enlarged Epicon group is expected to benefit from a larger order book, stronger earnings base and expanded construction capabilities.
Lagenda’s shares closed unchanged at RM1.40 on Tuesday, valuing the company at RM1.17 billion. Year to date, it is up 12%.
Epicon also closed unchanged at 16.5 sen a share, valuing the company at RM103.5 million. Year to date, it is up 32%.