News
Proposed acquisition of 25% equity interest in Bursa Malaysia Depository Sdn. Bhd. ("Bursa Depository") from ABM-MCD Holdings Sdn. Bhd. ("ABM-MCD") ("Proposed Acquisition")
BackJan 16, 2006
| General Announcement Reference No BM-060116-55921 |
| Company Name | : | BURSA MALAYSIA BERHAD |
| Stock Name | : | BURSA |
| Date Announced | : | 16/01/2006 |
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| Type | : | Announcement |
| Subject | : | Proposed acquisition of 25% equity interest in Bursa Malaysia Depository Sdn. Bhd. ("Bursa Depository") from ABM-MCD Holdings Sdn. Bhd. ("ABM-MCD") ("Proposed Acquisition") |
Contents :
1. Introduction
Further to the announcement made on 21 November 2005, the Board of Directors of Bursa Malaysia Berhad ("Bursa" or "Company") is pleased to announce that Bursa has entered into a Sale and Purchase Agreement ("SPA") for shares on 16 January 2006 to acquire 6,250,000 ordinary shares of RM1.00 each representing 25% equity interest in Bursa Depository ("Sale Shares") from ABM-MCD, for a total cash consideration of RM35.625 million or RM5.70 each.
2. Details of the Proposed Acquisition
2.1 Proposed Acquisition
The Proposed Acquisition involves the acquisition by Bursa of the Sale Shares from ABM-MCD, representing 25% of the issued and paid-up share capital in Bursa Depository for a total cash consideration of RM35.625 million or RM5.70 each. Upon completion of the Proposed Acquisition, Bursa will own 100% equity interest in Bursa Depository. The purchase consideration payable for the Proposed Acquisition shall be funded by internally generated funds. No other liabilities will be assumed by Bursa pursuant to the Proposed Acquisition.
Information on Bursa
The Kuala Lumpur Stock Exchange ("KLSE") was incorporated on 14 December 1976 as a company limited by guarantee. KLSE was demutualised pursuant to the Demutualisation (Kuala Lumpur Stock Exchange) Act 2003 and converted into a public company limited by shares on 5 January 2004, and thereafter known as Kuala Lumpur Stock Exchange Berhad ("KLSE Berhad") pursuant to the demutualisation. Upon the conversion, KLSE Berhad had vested and transferred the securities exchange business to a new wholly-owned subsidiary, Bursa Malaysia Securities Berhad, and became an exchange holding company and was renamed Bursa Malaysia Berhad on 14 April 2004. Bursa was listed on the Main Board of Bursa Malaysia Securities Berhad on 18 March 2005.
As at 12 January 2006, Bursa has an authorised share capital of RM1,000,000,000 divided into 2,000,000,000 ordinary shares of RM0.50 each, of which RM256,586,550 comprising 513,173,100 ordinary shares of RM0.50 each have been fully issued and paid-up.
Information on Bursa Depository
Bursa Depository was incorporated in Malaysia under the Companies Act 1965 on 26 October 1987 as a private limited company under the name of KLSE Corporate Services Sdn. Bhd. On 14 April 1990, it changed its name to Malaysian Central Depository Sdn. Bhd., and subsequently it assumed its present name on 28 May 2004. The principal activity is to provide, operate and maintain a central depository for securities listed on the securities exchange. Bursa Depository commenced its business on 23 October 1992.
Bursa Depository has an authorised share capital of RM50,000,000 divided into 50,000,000 ordinary shares of RM1.00 each, of which RM25,000,000 comprising 25,000,000 ordinary shares of RM1.00 each have been fully issued and paid-up.
As at the date hereof, Bursa Depository is 75% held by Bursa. The remaining 25% is held by ABM-MCD.
Information on ABM-MCD
ABM-MCD is incorporated under the Companies Act 1965 as a private company limited by shares. The company was basically established as an investment holding company for the members of The Association of Banks in Malaysia which are commercial banks operating in Malaysia.
A major investment of ABM-MCD is in Bursa Depository. As at the date hereof, ABM-MCD holds 25% equity interest in Bursa Depository.
Based on audited accounts for the financial year ended 31 December 2004, Bursa Depository's net profit for the year amounted to RM12,867,611, whereas its net tangible assets ("NTA") amounted to RM71,273,952.
(a) Purchase Price and Terms
Subject to the terms and conditions contained in the SPA, ABM-MCD agreed to sell and Bursa agreed to purchase the Sale Shares including all rights, benefits, powers and privileges attached and accruing to the Sale Shares from the date of SPA, free from all encumbrances, for the purchase price of RM35.625 million.
(b) Conditions Precedent
The SPA is subject to the following approvals being obtained within ninety (90) days from the date of the SPA:
(i) Resolutions of the Board of ABM-MCD, Bursa and Bursa Depository respectively being passed in accordance with the provisions of the relevant law and/or the provisions of the Memorandum and Articles of Association of ABM-MCD and Bursa respectively or any other provisions wherever it may be contained approving the sale and purchase of the Sale Shares; and (ii) Approval of the Foreign Investment Committee of the Prime Minister's Department, Malaysia for the acquisition of the Sale Shares by Bursa being obtained.
(c) Completion Completion of the sale and purchase of the Sale Shares ("Completion Date") shall take place within thirty (30) Business Days from the date the conditions precedent stipulated in the SPA have been fulfilled or any later date mutually agreed upon between the parties.
2.4 Basis in Arriving at the Purchase PriceSubject to the terms and conditions contained in the SPA, ABM-MCD agreed to sell and Bursa agreed to purchase the Sale Shares including all rights, benefits, powers and privileges attached and accruing to the Sale Shares from the date of SPA, free from all encumbrances, for the purchase price of RM35.625 million.
(b) Conditions Precedent
The SPA is subject to the following approvals being obtained within ninety (90) days from the date of the SPA:
(i) Resolutions of the Board of ABM-MCD, Bursa and Bursa Depository respectively being passed in accordance with the provisions of the relevant law and/or the provisions of the Memorandum and Articles of Association of ABM-MCD and Bursa respectively or any other provisions wherever it may be contained approving the sale and purchase of the Sale Shares; and (ii) Approval of the Foreign Investment Committee of the Prime Minister's Department, Malaysia for the acquisition of the Sale Shares by Bursa being obtained.
(c) Completion Completion of the sale and purchase of the Sale Shares ("Completion Date") shall take place within thirty (30) Business Days from the date the conditions precedent stipulated in the SPA have been fulfilled or any later date mutually agreed upon between the parties.
The total purchase consideration of RM35.625 million was arrived at on a willing buyer and willing seller basis, after taking into consideration the future earnings potential of Bursa Depository.
2.5 Terms of Payment
The purchase consideration for the Proposed Acquisition is payable as follows:
(a) Ten per centum (10%) upon the execution of the SPA; and (b) Ninety per centum (90%) on the Completion Date of the SPA (as defined therein).3. Rationale for the Proposed Acquisition and Risk Factors of the Proposed Acquisition
The Proposed Acquisition is expected to enhance earnings of Bursa Group and will facilitate a more efficient execution of group strategy towards enhancing growth potential and business efficiency. Bursa is not aware of any risk factors arising from the Proposed Acquisition other than risks inherent in the capital market and economic risk.
4. Financial Effects of the Proposed Acquisition
4.1 Share capital and major shareholders' shareholdings
The Proposed Acquisition will not have any effect on Bursa's share capital and major shareholders' shareholdings, as the Proposed Acquisition is to be satisfied in cash.
4.2 Net Tangible Assets ("NTA")
The NTA of the Bursa Group will be diluted in the immediate term due to the goodwill element. For illustrative purposes, set out in Table 1 below is the dilution on the NTA based on Bursa's audited accounts as at 31 December 2004.
4.3 Earnings
The Proposed Acquisition is expected to enhance the future earnings of Bursa Group.
5. Original Cost of Investment
ABM-MCD's investment in Bursa Depository was made between 1991 and 1995 at a total cost of RM5 million.
6. Approvals required
The Proposed Acquisition is also subject to the approval of the Foreign Investment Committee. The Proposed Acquisition does not require the approval of the shareholders of Bursa.
7. Major Shareholders' and Directors' Interest
None of Bursa's Directors and/or major shareholders and/or persons connected with Bursa's Directors and/or major shareholders have any interest, direct or indirect, in the Proposed Acquisition.
8. Statement by the Directors
After considering all aspects of the Proposed Acquisition, Bursa's Board of Directors is of the opinion that the Proposed Acquisition is in the best interest of Bursa.
9. Expected Date of Completion
Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by the first quarter of 2006.
10. Compliance with the Securities Commission's Policies and Guidelines and Guidelines on Issue/Offer of SecuritiesTo the best of the knowledge of the Board of Directors of Bursa, the Proposed Acquisition has not departed from the Securities Commission's Policies and Guidelines on Issue/Offer of Securities.
11. Documents for Inspection
The SPA is available for inspection at the Registered Office of Bursa at 9th Floor, Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur during normal business hours from Monday to Friday (except public holidays) for a period of one (1) month from the date of this announcement.
This announcement is dated 16 January 2006.
| Table 1 |
Before
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After
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RM('000)
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RM('000)
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| Share Capital |
250,000
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250,000
|
| Reserves |
1,210,295
|
1,210,295
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|
1,460,295
|
1,460,295
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| Intangible Assets |
(48,526)
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(66,333)
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| NTA |
1,411,769
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1,393,962
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| No. of ordinary shares issued ('000) |
500,000
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500,000
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| NTA/share (RM) |
2.82
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2.79
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