Malaysia tycoon Danny Tan is poised to take control of a little-known Singapore-listed firm, in a deal involving five sites in the bustling Iskandar growth belt worth an estimated RM3 billion (S$1.16 billion).
The company, Albedo, a steel and raw materials trader, has signed a non-binding deal with Temasya Cergas, a private vehicle of Mr Tan, 58, a prominent property developer.
Under the proposed deal, Albedo would buy the five sites in Iskandar’s key Nusajaya zone by issuing new Albedo shares – a move which could result in a “reverse takeover”.
This means Mr Tan could finish up with enough Albedo shares to be the new controlling owner of the company, listed on the Singapore Exchange’s second Catalist board for smaller companies.
Albedo announced the possible reverse takeover in an SGX statement on Tuesday. It expects to finalise the deal by Friday of next week and then needs to secure regulatory and shareholder approvals.
The announcement had no details on the purchase price, but one analyst conservatively estimates the land’s value to be more than RM3 billion.
The parcels, ranging from 12ha to 113ha, are in Iskandar’s flagship development Nusajaya. They are earmarked for an integrated business park and mixed commercial and residential developments.
Mr Tan is the 23rd richest person in Malaysia, according to Forbes. His flagship group is Tropicana Corp, which until May this year was called Dijaya Corp and is listed on Malaysia’s bourse.
He is the younger brother of Mr Vincent Tan, the country’s 10th richest man, who controls flagship conglomerate Berjaya Group.
The Tan brothers appear to be making inroads into Singapore. Mr Vincent Tan’s prized asset, lottery operator Sports Toto Malaysia, is expected to be listed as a business trust on the SGX later this year.They are not the only ones looking here. Other prominent Malaysians have picked up key stakes in listed firms here lately, in bids to diversify their exposure from their home Malaysia base.
They include former banker and stockbroker Tong Kooi Ong who emerged as a major shareholder of UPP Holdings, and former politician Mohd Zaid Ibrahim who in February this year emerged as a substantial shareholder in Ipco International.
There is also rising visibility of the “Iskandar play” on the bourse here. The appeal of Iskandar, an economic zone three times the size of Singapore, is largely premised on its proximity to the Republic.
That is set to grow stronger once a high-speed rail line linking Kuala Lumpur and Singapore is built. Abundant land and the healthy exchange rate also add to the value proposition.
Albedo shares, which resumed trading on Tuesday after a halt on Monday, did not, however, immediately reflect the excitement associated with Iskandar. The counter dipped 0.1 cent or 4 per cent to 2.3 cents after opening at a high of 2.6 cents.
Albedo, led by chief executive Tai Kok Chuan, who owns a 7 per cent stake, has not had a good run in recent years. Stiff competition and weak demand in the group’s core business have eroded profit margins, the firm said in the statement.
The planned acquisition of the Iskandar land, it hopes, will provide an opportunity to venture into new business areas of potential growth.
In April this year, the firm’s auditor flagged concerns about its ability to recover assets from a subsidiary in Thailand, which is also facing lawsuits from minority shareholders.
In 2008, it attempted to switch from steel trading to health care but the deal, involving a reverse takeover, flopped.