Leader Universal Holdings received a proposal for the sale of its entire assets and liabilities to a company owned by the founder family. Cash would be distributed back to shareholders through a special dividend and capital reduction payment. Usually these deals in Malaysia with the sale of the entire assets and liabilities take a long time to complete as once the deal is confirmed, they still need to get court approval to distribute back the capital to shareholders. From experience, the speed definitely depends on the size and motivation of the deal. Ranges between 6 months - 12 months. The deal was announced back in October 2011.
It is expected that the deal will be completed in the third quarter of 2012. The offer price is $1.10
The current price is $1.05. This implies a premium of 4.76%.
Assuming the completion date is the end of September 2012, the annualized return is still 8.5%. Lever it up once and you'll get returns of 17%.
This seems to be a low risk deal and will get more attractive with time if it stays at $1.05.
I would add this deal to my book.
Wednesday, March 7, 2012
KFC MK and QSR MK. A possible bidding war?
Update :
The Malay Chamber offer was rejected by the board already in January 2012.
Tuesday, March 6, 2012
Charter Hall Office REIT takeover by consortium led by GIC and Canadian pension fund. An arbitrage opportunity by going the other way?
I have been watching this deal by the sidelines. I was hesistant on engaging as the final value received on the deal is unknown.
The explanatory memorandum has given a ball park firgure that the US assets being sold should fetch around $1.11 if there are no other contingencies arising from any issues that might require them to keep a part of it.
In total the payment is $2.49 + $1.11 (subject to realised amount on the US assets). The first 7 assets were sold off and the returns would be $0.48. (This will be paid on 8th March 2012) Thus the remaining value should be $2.49 + $0.63 = $3.12.
Charter Hall Office announced today that the sale of the remaining assets will probably take longer thus incurring a cost of $3mm, or roughly 0.6 cents per share.
The last traded price for CQO AU is $3.07. Let assume we will receive $3.12 and we buy in at $3.07.
If you go through the Explanatory Memorandum, you'll find that $0.15 of the $1.11 (US asset sale component) will only be paid 6 months after the Implementation Date. Thus if we buy it at $3.07 today, and assume we get $3.12 in 6 months time, the IRR is only 2.88%.
Or rather i would look at it from a perspective, if i were to sell it at $3.07, put the money in the bank, at a 4.25% interest rate, i would get $3.134 in 6 months time. This seems like an opportunity for me. The risk is however, the US assets manage to fetch more than the expected $1.11, which I highly doubt.
Still an interesting case here. I might chinese/short some at $3.08 and above if I can get borrow.
The explanatory memorandum has given a ball park firgure that the US assets being sold should fetch around $1.11 if there are no other contingencies arising from any issues that might require them to keep a part of it.
In total the payment is $2.49 + $1.11 (subject to realised amount on the US assets). The first 7 assets were sold off and the returns would be $0.48. (This will be paid on 8th March 2012) Thus the remaining value should be $2.49 + $0.63 = $3.12.
Charter Hall Office announced today that the sale of the remaining assets will probably take longer thus incurring a cost of $3mm, or roughly 0.6 cents per share.
The last traded price for CQO AU is $3.07. Let assume we will receive $3.12 and we buy in at $3.07.
If you go through the Explanatory Memorandum, you'll find that $0.15 of the $1.11 (US asset sale component) will only be paid 6 months after the Implementation Date. Thus if we buy it at $3.07 today, and assume we get $3.12 in 6 months time, the IRR is only 2.88%.
Or rather i would look at it from a perspective, if i were to sell it at $3.07, put the money in the bank, at a 4.25% interest rate, i would get $3.134 in 6 months time. This seems like an opportunity for me. The risk is however, the US assets manage to fetch more than the expected $1.11, which I highly doubt.
Still an interesting case here. I might chinese/short some at $3.08 and above if I can get borrow.
WCL AU update
Westside Corp has gone into trading halt and will resume trading on Thursday. I expect that there will be a significant announcement. Probably agreeing the terms for a definitive binding proposal.
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