The biggest property developer by market value in South-East Asia – CapitaLand Ltd made an official announcement that it intends to buy the rest of its mall unit. The company revealed that it made an offer of 3.06 billion Singapore dollars (2.4 billion dollars), or 2.22 Singapore dollars per share for CapitaMalls Asia. CapitaLand is being advised on its bid by both Morgan Stanley and Credit Suisse, which would be paid with internal cash resources and borrowings.
Ms. Regina Lim, who heads the Asian property research division of Standard Chartered, said in a Bloomberg interview: “CapitaLand is doing a lot more integrated projects compared to when they did the listing of CapitaMalls, so the deal is a good investment by CapitaLand.”
CapitaLand Ltd, which holds 65.3% in CapitaMalls Asia Ltd, explained in its announcement that it plans to acquire and delist the shopping-mall unit. The company said in its official statement, which was cited by the Wall Street Journal: “The intention of the offer is to delist [CapitaMalls Asia] and fully integrate it into the CapitaLand Group.”
CapitaMalls Asia was listed on the Singapore Exchange in November 2009. The initial public offering of the company amounted to 2.8 billion Singapore dollars. Now CapitaLand Ltd intends to delist the unit as a strategic move, which is part of a reorganization the company is carrying out in order to focus more on the Chinese and Singaporean markets.
Delisting the mall division of the company and making it private is considered as beneficial for the CapitaLand Groups earnings per share. The earnings are expected to be increased by about 22% for the year ended December 31st.
One of the analysts, who work for UOB Kay Hian – Vikrant Pandey – commented the companys decision in an interview, which was cited by Bloomberg: “The move will be near-term negative, but longer-term positive. While this will help reduce the holding company discount that market applies in valuing CapitaLand, investors will ascribe deeper discounts for subsequent listings that CapitaLand intends to do.”
The current share price of CapitaLand Ltd is 1.02% down, and its one-year change is -16.18%, data by Bloomberg showed. According to the Financial Times, the 22 analysts offering 12-month price targets for CapitaLand Ltd have a median target of 376.40, with a high estimate of 450.00 and a low estimate of 310.00. The median estimate represents a 28.90% increase from the last price of 292.00.
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