Over the weekend, CapitaLand (CAPL) announced that, together with concert parties, it has by 5pm on 6 Jun-2014 owned, controlled or have agreed to acquire (including acceptances) ~97.1% of CMA’s issued share capital. Therefore, its stake in CMA is now above the threshold to compulsorily acquire the remaining shares that it does not own. The offer for CMA shares will close at 5:30pm on 9 Jun-2014 and CMA will be suspended from trading on 10 Jun-2014. We continue to see CAPL’s move to delist CMA as a rational one that will simplify the group’s organizational structure and allow management to deploy significant capital to well-understood CMA assets. More significantly, the privatization of CMA will also be accretive to CAPL’s earnings and ROE, which is now a key focus for management. Maintain BUY on CAPL with an unchanged fair value estimate of S$3.79 (25% discount to RNAV).
Will compulsorily acquire remaining CMA shares
Over the weekend, CapitaLand (CAPL) announced that, together with concert parties, it has by 5pm on 6 Jun-2014 owned, controlled or have agreed to acquire (including acceptances) an aggregate of 3,784,462,936 shares of CapitaMalls Asia (CMA), which represents ~97.1% of CMA’s issued share capital. Therefore, its stake in CMA is now above the threshold to compulsorily acquire the remaining shares that it does not own. The offer for CMA shares will close at 5:30pm on 9 Jun-2014 and CMA will be suspended from trading on 10 Jun-2014. CMA shareholders whose valid acceptances are received by the closing date will be paid within 10 days, while remaining shareholders will receive notification regarding the compulsory acquisition of their CMA shares.
To simplify the group’s organizational structure
In our view, the final offer of S$2.35 per CMA share, priced at a 28% premium to book and a 3% discount to RNAV, is a sensible price equitable to both CAPL and minority shareholders. We continue to see CAPL’s move to delist CMA as a rational one that will simplify the group’s organizational structure and allow management to deploy significant capital to well-understood CMA assets. More significantly, the privatization of CMA will also be accretive to CAPL’s earnings and ROE, which is now a key focus for management.
Enhancing capabilities in integrated developments
The full integration of CMA will also enhance the group’s capabilities in integrated developments across its key markets Singapore and China, in particular its Raffles City projects rolling out across key Chinese cities. As at end Mar-14, management reports that newly operational assets, Raffles City Chengdu and Raffles City Ningbo, are gaining good traction. The retail components for both assets are already 98% and 92% committed, respectively, with tenant sales and shopper traffic showing firm double-digit YoY growth. Maintain BUY on CAPL with an unchanged fair value estimate of S$3.79 (25% discount to RNAV).
Over the weekend, CapitaLand (CAPL) announced that, together with concert parties, it has by 5pm on 6 Jun-2014 owned, controlled or have agreed to acquire (including acceptances) an aggregate of 3,784,462,936 shares of CapitaMalls Asia (CMA), which represents ~97.1% of CMA’s issued share capital. Therefore, its stake in CMA is now above the threshold to compulsorily acquire the remaining shares that it does not own. The offer for CMA shares will close at 5:30pm on 9 Jun-2014 and CMA will be suspended from trading on 10 Jun-2014. CMA shareholders whose valid acceptances are received by the closing date will be paid within 10 days, while remaining shareholders will receive notification regarding the compulsory acquisition of their CMA shares.
To simplify the group’s organizational structure
In our view, the final offer of S$2.35 per CMA share, priced at a 28% premium to book and a 3% discount to RNAV, is a sensible price equitable to both CAPL and minority shareholders. We continue to see CAPL’s move to delist CMA as a rational one that will simplify the group’s organizational structure and allow management to deploy significant capital to well-understood CMA assets. More significantly, the privatization of CMA will also be accretive to CAPL’s earnings and ROE, which is now a key focus for management.
Enhancing capabilities in integrated developments
The full integration of CMA will also enhance the group’s capabilities in integrated developments across its key markets Singapore and China, in particular its Raffles City projects rolling out across key Chinese cities. As at end Mar-14, management reports that newly operational assets, Raffles City Chengdu and Raffles City Ningbo, are gaining good traction. The retail components for both assets are already 98% and 92% committed, respectively, with tenant sales and shopper traffic showing firm double-digit YoY growth. Maintain BUY on CAPL with an unchanged fair value estimate of S$3.79 (25% discount to RNAV).
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