Wednesday 28 September 2011

SP Setia Is The Next Target

Seems like the Malaysia government is trying to take control on major property developers. After the successful merger of UEM Land and Sunrise, failed merger between MRCB & IJM, proposed deal between Sime and E&O, now SP Setia, one of the country's best developer, is the next target by government linked fund or company.

Today Permodalan Nasional Berhad (PNB) proposed to take over SP Setia at a price of RM3.90 and its warrant at RM0.91. This represents a premium of 40sen (11%) on its mother share and 45sen (98%) on its warrant. There is a "wow factor" on its warrant!

This explains why both shares surged massively on high volume yesterday, after weeks of free falling, where SP Setia rose 13% and and SP Setia-WB rose 21%. Today both shares are suspended and we can expect another surge tomorrow when they resume trading.

Government-linked funds PNB, EPF and KWAP collectively owns 47% of SP Setia's share. This is just a proposal. Will the take over be successful? Or will it end up like MRCB-IJM? Will SP Setia be privatized?

When the government takes some control in property developers, may be the launch of new projects and the rise in property price may slow down a bit.

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