Singapore “Flyer” of the Week: CapitaMalls Asia Limited

CapitaMalls Asia (SGX: JS8), or CMA, made headlines this week when it was announced that CapitaLand (SGX: C31) intends to take the former private at a price of S$2.22 per share. This has caused the stock to surge 21.3% so far this week to close at S$2.19 on Thursday.

CapitaMalls Asia is one of Asia’s largest listed shopping mall developers, owners and managers, with a total property value of around S$34.3 billion. It has interests in and manages a pan-Asian portfolio of 105 shopping malls across 53 cities in the five countries of Singapore, China, Malaysia, Japan and India. In Singapore, the shopping malls in the portfolio include ION Orchard, Plaza Singapura and Raffles City Singapore.

The privatisation offer was made public on 14 April 2014. The total deal is worth approximately S$3.06 billion and CapitaLand wants to delist CMA once it has bought up more than 90% of the latter’s shares. Currently, CapitaLand controls around 65.3% of CMA. The price of S$2.22 per share represents a premium of 27% over the one-month volume-weighted average price.

The rationale for the offer is to fully integrate CMA into the CapitaLand Group instead of having it as a listed entity. CapitaLand wants to achieve four objectives with the proposed delisting:

  1. Fully integrate CMA and CapitaLand’s competitive strengths in integrated developments
  2. Simplify CapitaLand Group’s organisational structure
  3. Increase CapitaLand’s financial flexibility and scale
  4. Unlock shareholder value and achieve synergies

Mr Lim Ming Yan, President & Group CEO of CapitaLand Limited, said: “The proposed delisting of CMA is in line with our ’One CapitaLand‘ strategy. Post transaction, there will be six4 listed entities in the CapitaLand Group, compared to eight in January 2013. More importantly, development activities will be undertaken by CapitaLand, while most of our stabilised assets will be held in the listed REITs. This will significantly simplify CapitaLand Group’s structure and enhance our ability to undertake and optimise integrated developments. CapitaLand will be in a better position to capitalise on the growing trend towards integrated developments in our core markets of Singapore and China.”

CMA is currently trading at a historical price-to-earnings ratio of around 14.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.