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CapitaLand offers S$3.06b to buy out shopping mall unit

SINGAPORE — CapitaLand has offered to take its shopping mall subsidiary private by buying over the rest of the shares it does not already own for about S$3.06 billion, in a move that will allow it to better navigate its core markets amid an increased focus on mixed developments.

SINGAPORE — CapitaLand has offered to take its shopping mall subsidiary private by buying over the rest of the shares it does not already own for about S$3.06 billion, in a move that will allow it to better navigate its core markets amid an increased focus on mixed developments.

CapitaLand, South-east Asia’s largest listed developer, said yesterday it has bid S$2.22 a share for CapitaMalls Asia (CMA), a 23 per cent premium to its closing price last Friday. Trading in the shares of both companies was halted yesterday.

CapitaLand owns 65.3 per cent of CMA, which assets include ION Orchard and Plaza Singapura. The purchase will be funded through a combination of internal cash resources and borrowings.

President and Group Chief Executive of CapitaLand Lim Ming Yan said integrating CMA into the group operations is a strategic move that will allow CapitaLand to be more nimble in reacting to changing conditions in its core markets in Singapore and China.

“The market has changed. A few years ago we saw pure play residential players, but when you look at the market now, companies are already starting to move into mixed developments and going into different asset classes,” said Mr Lim at a media briefing yesterday.

Mr Lim added CapitaLand and CMA had over the past two to three years collaborated on several mixed developments, but that the cooperation was “cumbersome” as both are separately listed entities.

“The fact that CMA is listed (separately) means we have to observe certain corporate governance requirements and all these make it a bit more cumbersome (and) slower for us to respond to the market,” he said.

“Given that going forward we are seeing more of these opportunities, I would say it makes sense for us then to … collapse into one entity, it will allow the group to be more nimble, we can react faster to the competition.”

Analysts generally favoured the move. Standard Chartered’s Head of Asian Property Research, Ms Regina Lim, told Bloomberg: “CapitaLand is doing a lot more integrated projects compared with when they did the listing of CapitaMalls, so the deal is a good investment by CapitaLand.”

CMA was listed in Singapore in November 2009 after a S$2.8 billion initial public offering, the nation’s second-largest IPO at the time.

Privatising CMA will also allow CapitaLand to have more flexibility to access and allocate capital across its different business units and direct its resources in a manner that “best enhances shareholder returns”, the company said.

The deal will raise CapitaLand’s earnings per share for its 2013 financial year by about 21.5 per cent and improve the return on equity as at end-December from 5.4 per cent to about 6.7 per cent on a pro forma basis.

“The transaction unlocks shareholder value … as it is expected to be immediately accretive. There will also be revenue and costs synergies achieved through the delisting of CMA, which comes from reduced listing costs and flexibility to mobilise services and sources within the group,” said Mr Lim.

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