Batu Kawan Bhd has agreed to dispose of its entire equity interest in Chemical Company of Malaysia Bhd (CCM) to TMK Chemical Bhd for RM939.87 million, in a transaction that will see BKB retain a sizeable strategic stake in the enlarged TMK group.
BKB and its wholly owned subsidiary Enternal Edge Sdn Bhd entered into a conditional share sale and purchase agreement with TMK on Sept 18 for the disposal of 300.17 million CCM shares, representing 100% of CCM.
The consideration will be satisfied through RM438.55 million in cash and 262.5 million new TMK shares valued at RM501.32 million, to be issued at RM1.9098 per share.
The consideration shares will represent 20.8% of TMK’s enlarged issued share capital, giving BKB continued exposure to the chemicals business after relinquishing direct ownership of CCM.
Of the total cash consideration, RM418.68 million will be paid at completion, while up to RM9.87 million may be distributed to the vendors as a pre-completion net cash dividend. CCM will also be required to retain RM10 million of minimum net cash at completion as collateral for any adjustment to the disposal consideration.
The transaction excludes CCM’s interest in Orica-CCM Energy Systems Sdn Bhd, as well as two parcels of land in Bukit Raja, Selangor and Bentong, Pahang associated with that business.
BKB said the disposal will allow it to streamline its portfolio and focus on its core businesses of oil palm plantations and property development, while retaining participation in the chemicals sector through its shareholding in TMK.
The cash proceeds are expected to strengthen BKB’s liquidity and provide greater flexibility to reduce borrowings, optimise its capital structure and fund future investments and capital expenditure.
BKB said consolidating CCM under TMK is expected to create a larger and more focused chemicals platform, with potential synergies from production capacity optimisation, procurement efficiencies and broader technical and operational capabilities.
The transaction is conditional on BKB securing an exemption from the Securities Commission Malaysia from having to undertake a mandatory general offer for the remaining TMK shares.
The issuance of the consideration shares would increase the collective shareholding of BKB and its persons acting in concert by more than 2% within a six-month period, triggering a mandatory offer obligation under takeover rules.
BKB said no single party, including itself, would individually cross the mandatory offer threshold, and the obligation arises solely from the increase in the collective shareholding of BKB and its concert parties.
As BKB does not intend to undertake a mandatory offer, SC approval for the exemption is a condition precedent to the CCM disposal.
