CapitaLand plans to take CapitaMalls Asia private through S$2.22 a share offer

Southeast Asia’s largest developer CapitaLand has announced plans to take its shopping arm private.

CapitaLand is offering S$2.22 per share for all remaining shares in CapitaMalls Asia (CMA) that it does not already own, thus valuing the planned purchase at more than S$3 billion.

CapitaLand said it wants to sharpen its competitive edge in the integrated development space where it sees opportunities, particularly in China.

One of several integrated projects developed by CapitaLand is Raffles City.

The development, located in Singapore’s prime downtown area, comprises offices, hotels and retail space.

It was injected into CMA when the shopping malls operator was listed in 2009 in what was then one of Singapore’s largest ever initial public offerings.

CapitaLand still holds 65.3 percent of CMA but the developer said it is changing its course to seize growing opportunities in the integrated development segment, especially in China.

CapitaLand President and Group CEO Lim Ming Yan said: “The IPO gave CMA the opportunity with additional capital to grow its business. We have reached the stage over the recent two to three years, where we see a lot more opportunities in integrated developments. These are developments where for pure play shopping mall operators and owners, it’s hard to operate. CMA will find it awkward to go in where there are residential, office components. But at the same time, for CapitaLand to go into some of these projects, we can’t do it without CMA being a part of it.”

CapitaLand said it sees growing opportunities in the integrated development sector – particularly in China where ongoing urbanisation is taking place.

Mr Lim said: “China is a market that is a lot bigger. It’s also at stage where the growth is a lot faster than Singapore, which is at a different stage of development. Singapore is more mature, and of course, in terms of size, it’s a much smaller market. Overtime, we’ll see more of these opportunities in China than in Singapore.”

CapitaLand said its offer price of S$2.22 in cash for each share is a premium of 27 percent over CapitaMalls Asia’s one-month volume-weighted average price.

The offer price is also 20.7 percent higher than CMA’s net asset value per share as at 31 Dec 2013.

The developer added that the deal will simplify the Group’s structure significantly and allow it to get an edge in the increasingly competitive integrated development space.

Mr Lim said: “The amount of process that we need to go through to get, for example, CapitaLand to co-invest with CMA in Westgate is actually quite tedious. In a competitive situation, we would want the team to focus on getting the deal rather than to focus on making sure they fulfil all the compliance.”

CMA manages 105 shopping malls, earning 43 percent of its revenue in 2013 from China, 32 percent from Singapore and most of the rest from Japan and Malaysia.

Source : Channel NewsAsia – 14 Apr 2014