OSK Holdings to merge OSK Property, PJD and diversify into property and hospitality

PETALING JAYA: OSK Holdings Bhd will merge its property arm, OSK Property Holdings Bhd (OSKP), with PJ Development Holdings Bhd (PJD) and inject it into the group in a RM1.75 billion part cash and share deal.
The move will see the diversification of OSK Holdings into property development, construction, manufacturing and trading of cables and hotel and leisure.
The group which is currently involved in investment holding, capital financing and property investment intends to continue with its existing core businesses post-diversification.
OSK Holdings said the proposed acquisitions would enable the enlarged group to consolidate the businesses of OSK Holdings, OSKP and PJD as one single entity, which can be managed more efficiently, to achieve cost synergy and to avoid any potential conflict of interest in the future.
OSK Holdings announced late yesterday that the group plans to acquire 177.64 million RM1.00 shares, or a 73.65% stake in OSKP, from its managing director and CEO Tan Sri Ong Leong Huat , Land Management Sdn Bhd and parties acting in concert, for RM355.29 million or 177.642 miliion new shares in OSK Holdings at an issue price of RM2 per share.
It will also acquire 143.36 million ordinary shares of RM1 each in PJD, or a 31.7% stake, for a total of RM229.37 million or RM1.60 per PJD share to be satisfied by the issuance of 114.69 million new OSK Holdings shares at an issue price of RM2 per share.
Following the share sale agreements, OSK Holdings also proposes a mandatory take-over offer to acquire the remaining 26.4% stake in OSKP, or 63.56 million OSKP shares, at an offer price of RM2 per OSKP share by either cash or a share exchange at an issue price of RM2 per OSK Holdings share.
A voluntary take-over offer is also proposed to acquire the remaining 308.35 million PJD shares, of 68.3% of the issued and paid-up share capital of PJD, at an offer price of RM1.60 per PJD share, to be satisfied either for a cash consideration or for a share exchange offer of OSK Holdings' shares issued at an issue price of RM2 per share.
The maximum consideration for the proposed offers is RM1.17 billion. OSK Holdings has priced OSKP warrants at RM1 a piece, while PJD's warrants are at RM0.60 a piece. The warrants will be purchase entirely in cash.
Ong and the parties acting in concert which currently owns a 41.2% stake in OSK Holdings, plan to seek for an exemption from having to make an MGO for OSK Holdings as the proposals are expected to trigger the threshold for it.
Following the exercise, OSK will also have a bonus issue of up to 237.74 million warrants in OSK to the existing shareholders of OSK, on the basis of one free warrant for every four existing OSK shares held.
It also proposed to declare a special cash dividend of 15 sen for every one existing OSK share held, which will involve a total payment of up to RM142.64 million.
The proposals are subject to approvals from Bank Negara Malaysia, the Securities Commission Malaysia, Bursa Malaysia and OSK shareholders.
Application to the relevant authorities is expected to be made within three months and the proposals are expected to be completed by the third quarter of 2015.