Published February 6, 2009

IOI shares rise on buyout offer

	Email this article
	Print article
	Feedback

(KUALA LUMPUR) Shares of IOI Properties rose 12 per cent to RM2.49 after its parent IOI Corp proposed buying out minority stockholders in the property developer.

IOI Corp, the second largest plantation stock on the Kuala Lumpur bourse by market value, dropped 24 sen, or 6.1 per cent, to RM3.68, the worst performer on the benchmark Composite Index.

The planter said on Wednesday it plans to take the 76 per cent-owned property unit private by offering RM2.60 per share to minority shareholders at a total cost of RM506 million (S$210.8 million).

Shares of IOI Properties were trading higher as they present a cheaper entry into IOI Corp, analysts said.

But IOI Corp risks a low take-up for its plan as the largely stock offer has a cash component of just 33 sen per IOI Properties share, said Ong Chee Ting, plantation analyst at Maybank Investment Bank.

'But minority shareholders may be compelled to take the offer as IOI intends to delist the company,' he said.

The buyout 'is a good deal but the bottomline impact is minimal', said James Ratnam, analyst at TA Securities.

'Ultimately, looking beyond the current depressed market condition, we believe IOI Properties still owns an array of prime landbanks with good development potential, particularly in Johor and Singapore,' he added.

A full acceptance will result in IOI Corp paying RM60 million in cash and issuing 119 million new IOI Corp shares, which would raise its capital base by 1.9 per cent to 6.27 billion shares. -- Reuters