KUALA LUMPUR (Sept 28): Hap Seng Consolidated Bhd (KL:HAPSENG) said it plans to sell its Singapore-listed building materials unit for about S$140 million (RM447 million) following a takeover offer.
23 Capital Pte Ltd is offering cash per share of S$0.64, or RM2.04, to take private Hafary Holdings Ltd and Hap Seng Consolidated has agreed to accept the offer for its 50.82% stake, according to an exchange filing. 23 Capital is a vehicle owned by the Hafary founding family.
The proposed disposal will allow Hap Seng Consolidated to realise its investment in Hafary at a premium over its initial cost of just S$0.24 per share, as well as above market and historical trading prices, the company said.
If the deal goes through, Hafary will cease to be a subsidiary of Hap Seng Consolidated, preventing any consolidation of any financial results. Hap Seng Consolidated will book an estimated gross gain on disposal of about RM187.3 million from the deal expected to be completed before the year ends.
While it will miss out on future earnings from Hafary, “the proposed disposal enables the group to realise its investment in cash at an attractive valuation, thereby strengthening its financial position and enhancing financial flexibility”, Hap Seng Consolidated said.
Proceeds from the sale have been earmarked by Hap Seng Consolidated for partial repayment of borrowings totalling RM6.9 billion at the end of 2025.
Hafary, which manufactures and trades building materials such as tiles, stone, mosaic, wood-flooring, quartz tops and sanitary ware and fittings, contributed RM48.4 million to Hap Seng Consolidated’s profit and RM19.85 million in dividends.
Low Kok Ann, a Singaporean and chief executive of Hafary, controls 23 Capital with his son Low See Ching and daughter Low Bee Lan. The elder Low, also known as Eric Low, started the business from a single ceramic tile shop in 1980.
Hap Seng Consolidated bought into Hafary in 2015 as a stepping stone to expand in the region. At the time of the acquisition, Hap Seng Consolidated was mainly involved in upstream segment of the building materials market while Hafary was strong downstream.
Maybank Investment Bank is as principal adviser to Hap Seng Consolidated while United Overseas Bank is advising the buyer 23 Capital.