Malaysia's SP Setia Bhd. is poised to take full ownership of fellow property developer Setia Federal Hill Sdn. Bhd.
Under a March 8 agreement, SP Setia agreed to acquire the remaining 50% stake it does not already own in Setia Federal Hill from Mekar Gemilang Sdn. Bhd. for approximately 431.9 million Malaysian ringgit in cash, with the deal expected to close by the third quarter. The 50% stake represents 500,000 Setia Federal Hill ordinary shares.
Setia Federal Hill owns two parcels of leasehold land totaling about 51.57 acres in Kuala Lumpur, with a market value of approximately 2.36 billion ringgit. The land could be developed into an integrated commercial and residential project, with an estimated gross development value of up to about 20.19 billion ringgit.
SP Setia expects to finance the acquisition with cash proceeds from its December 2016 issuance of Islamic redeemable convertible preference shares and/or bank borrowings.
The company expects the planned stake purchase to contribute positively to the group's future earnings upon the development of the land.
Closing of the deal is conditional upon SP Setia receiving approval from its board, among other conditions.
As of March 7, US$1 was equivalent to 3.90 ringgit.
