EMAAR Properties, the No. 1 developer in the Middle East, has made an unconditional cash offer for Asian retailer RSH, which has the rights to various brands including Zara, Massimo Dutti and Mango.
Through its subsidiary Emirates Property Holdings, it is offering to acquire the remaining shares it does not already control at 77 cents apiece, valuing the Singapore- listed retailer at about $272 million.
The offer price is 92.5 per cent higher than the counter’s last traded price of 40 cents on May 22, the last day the company’s shares were traded.
The mandatory offer was triggered after Emaar, via Standard Chartered Bank, acquired some debts of Golden Ace, its joint venture firm with India’s MGF Group.
In March 2007, Golden Ace paid about $370 million to acquire 216.17 million shares, or a 61.3 per cent stake, in RSH.
The debt acquisition raises Emirates Property’s stake in RSH to 286.2 million shares, or 81.17 per cent – triggering the takeover offer according to rules in the Singapore Code on Takeovers and Mergers.
By acquiring Golden Ace’s debt, Emaar ‘hopes to re-instil confidence in RSH’s principals and bankers’, Standard Chartered Bank said yesterday in the offer document on behalf of Emaar and RSH.
Emaar Properties, which has a 30 per cent interest in Golden Ace, wants to protect the value of its indirect investment in RSH through Golden Ace, it added.
Golden Ace had earlier defaulted on certain loans from Deutsche Bank, under two facility agreements worth US$160 million (S$230 million). As a result, RSH in April got a notice from Deutsche of its deemed interest in 216.17 million shares after it seized the shares.
The chairman of both Emaar and RSH, Mr Mohammed Alabbar, who has a 19.87 per cent stake in RSH, has decided to not accept Emaar’s offer for the company.
In such an instance, Emaar does not expect to have any rights of compulsory acquisition in connection with the offer.
It also demonstrates the present intention of Emaar to maintain the listing status of RSH on the Singapore Exchange.
‘Business for the group remains as usual, the group continues to maintain an independent stance in terms of operations, financial management and business direction,’ said chief operating officer of RSH Kesri Kapur.
Source : Straits Times – 20 Jun 2009