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CI Holdings shareholders to get windfall from unit sale

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CI Holdings shareholders to get windfall from unit sale Empty CI Holdings shareholders to get windfall from unit sale

Post by hlk Wed 31 Aug 2011, 12:56

PETALING JAYA: CI Holdings Bhd is expected to pay out to shareholders a minimum of 60% of the RM820mil it will receive from the sale of its bottling unit Permanis Sdn Bhd to Asahi Group Holdings Ltd.

OSK Research said this in a report yesterday citing a recent analyst meeting with CI Holdings.

“As management guided that it is targeting a growth company, we believe acquisition cost (of the company it intends to buy with the proceeds) will not be substantial, hence we think a minimum 60% of net cash payout is possible,” it said in the note.

Shares of CI Holdings closed up 10sen, or 2.3%,to RM4.33 after the house upgraded its call on the stock to a “trading buy” yesterday from a “take profit” call on July 22.

“While we are still uncertain which company CI Holdings will eventually acquire, the acquisition could extend beyond the specified 12-month period based on management guidance,” Osk said.

“Nonetheless, we believe the deal is very likely to go through.”

To recap, CI Holdings is proposing to sell Permanis to Japan’s Asahi for RM820mil – no small feat considering Permanis was worth RM72mil in 2004 when CI Holdings first picked it up.

Asahi’s offer price values Permanis at 24.7 times its historical earnings.

When finalised, CI Holdings will realise a gain on disposal of about RM677.1mil after deducting the cost of investment (RM72mil), post-acquisition reserves of Permanis (RM51.9mil) and estimated expenses for the proposed disposal (RM19mil). The deal is expected to be completed later this year.
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