1MDB buys Genting utility unit for RM2.3b
KUALA LUMPUR, Aug 13 – Malaysian state development firm 1Malaysia Development Bhd (1MDB) has agreed to buy conglomerate Genting Bhd’s power and utility unit for RM2.3 billion in cash, Genting said, as 1MDB adds to its power holdings.
Local newspapers had quoted sources as saying that 1MDB had identified power as a core business and was buying assets from Genting as it aimed to ensure Malaysian security of supply.
The purchase of the unit, Mastika Lagenda, would be the second major utility deal for the state company, which in March acquired the power assets of Malaysia’s second richest man, Ananda Krishnan, for RM8.5 billion.
“The proposed Mastika Lagenda disposal represents a good opportunity for the Genting group to realise an immediate and attractive return on its investment,” Genting said in a local stock exchange filing today.
It added that the deal, which is expected to complete on Aug 30, 2012, will also enable its power division to focus time and resources on developing its power generation portfolio abroad.
Mastika Lagenda, of which Genting and its subsidiaries hold 97.7 per cent, owns 75 per cent of electric power generator Genting Sanyen Power and all of Mastika Utilities & Services and Mastika Water Management, both involved in water treatment, supply and management businesses.
As part of the deal, Genting said it was also selling six parcels of industrial land measuring 3.22 million square feet in state-rich Selangor to 1MDB for RM38.8 million.
Genting said it expected to record a one-off net gain of RM1.9 billion from the proposed disposals, contributing to an increase of 52 sen to its consolidated earnings per share and net asset per share for the current financial year ending Dec 31, 2012.
“However, following the proposed disposals, the earnings contribution from the Genting group’s power division will be reduced,” it said.
Asia Trade Investments Ltd, which owns the remaining 2.3 per cent stake in Mastika Lagenda, will also sell its entire stake to 1MBD for RM49.6 million, according to Genting. – Reuters