By Khairie Hisyam
Sime Darby Bhd has agreed to talk exclusively to Eastern & Oriental Bhd (E&O) for the next six months about selling a 135-acre piece of freehold land in Sungai Buloh to the latter.
In a Bursa filing today, E&O said that it has signed a memorandum of agreement (MoA) with Sime Darby’s subsidiary Sime Darby Elmina Development (SDED) which the group owns via its property arm Sime Darby Property over the proposed sale of the land, which is part of an 843-acre land plot that in turn forms part of SDED’s larger Elmina West estate.
The non-binding MoA will allow SDED and E&O to negotiate in good faith in an exclusive period of six months over the proposed sale of the land, on which E&O intends a mixed development, centred around a wellness concept, said E&O in the filing.
If the development proceeds, it will mark E&O’s first township development in the Klang Valley.
“The MOA, with the view of entering into the SPA, is in line with the objectives of the collaboration agreement dated 27 August 2011 entered into between E&O and Sime Darby Nominees Sendirian Berhad to provide synergistic benefits and create value for stakeholders of both Sime Darby and E&O through the sharing of knowledge and expertise, leveraging on our respective strengths to open new market opportunities and developing new product offerings,” said the company in its statement.
Should both parties fail to agree on a purchase price, a single valuer will be appointed to appraise the land and the valuation will be final and binding on both partie, E&O said in its announcement to the local bourse.
E&O said that both parties will enter into a sale and purchase agreement by the first quarter of next year at the latest barring any unforeseen circumstances.
E&O closed unchanged at RM2.08 today after an uneventful day’s trading while Sime Darby rose by 1 sen to close at RM9.51.
Sime Darby has a 32% stake in E&O, making it the largest shareholder of the property developer
When Sime Darby acquired the 32% block in E&O in January last year, it created a stir for a number reasons Some questioned why Sime Darby which has a reputable property development outfit was buying into a much smaller competitor.
There were others who felt that Sime Darby had acted in concert with other shareholders and thus triggered mandatory general offer for E&O, but this was attributed to the high premium Sime Darby had paid for its block.
Sime Darby’s purchase price for the 30% block was RM766 million cash, or at RM2.30 per E&O share and per loan stock which was a huge 60% premium over E&O’s trading price of about RM1.45. at the time of the purchase.
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