KUALA LUMPUR: YTL Corp Bhd's 76.98 per cent-owned subsidiary Malayan Cement Bhd has received shareholders' approval to buy YTL Cement Bhd's entire cement and ready-mixed concrete operations in Malaysia for RM5.16 billion cash.
The approval was granted at an extraordinary general meeting today, YTL Cement said in a statement.
YTL Cement and Malayan Cement managing director Datuk Seri Michael Yeoh Sock Siong said the deal would bolster profitability and value enhancement, increasing the size of Malayan Cement's cement and ready-mixed concrete businesses.
He said it would also enable YTL Cement to consolidate similar operating businesses under a singular umbrella.
"Upon completion, the effectiveness and efficiency of our cement operations and ability to deliver seamless solutions to customers will be optimised, boding well for the positive growth and outlook of Malayan Cement and the industry going forward," he said.
YTL Cement and Malayan Cement executive chairman Tan Sri Francis Yeoh Sock Ping said YTL was extremely grateful for the steadfast support from the minority shareholders of Malayan Cement throughout the process, endorsing the group's long-term vision from the start.
"This includes the new shareholders who came onboard and ensured the success of the private placement exercise in June this year, a key building block of this strategic asset rationalisation plan to build value for Malayan Cement and its shareholders," he said.
Of the total consideration, RM2 billion will be settled in cash, RM1.41 billion through the issuance of 375.5 million new shares in Malayan Cement, and RM1.75 billion via the issue of 466.7 million new irredeemable convertible preference shares (ICPS) in Malayan Cement.
The issue price for the new Malayan Cement shares and ICPS to be issued has been fixed at RM3.75 per share/ICPS.
This was also the price YTL Cement paid for the acquisition of the 76.98 per cent in Malayan Cement in 2019, which was premised on the potential synergies that would arise from the integration of businesses between the two groups.
The partial settlement of the consideration through the issuance of new shares and ICPS rather than wholly in cash is intended to enable Malayan Cement to optimise its cash reserves and gearing levels.
The strategic realignment will foster value creation for shareholders of Malayan Cement and allow investors to invest directly on a focused basis in Malaysia's leading building materials company.