The board of Jurong Cement has turned down a proposal by YTL Cement Singapore to acquire a portion of its business.
This is because Holcim Investments (Singapore), which controls more than 55 per cent of Jurong Cement, has rejected the offer.
In a letter to Jurong Cement made public yesterday, Holcim Investments said YTL Cement’s proposal would mean stripping the cement plant and terminal assets, and leaving behind the residual ready-mixed concrete and dry-mix mortar assets of the company.
“This will emasculate the remaining businesses of Jurong Cement,” it said.
Under the circumstances, the mainboard-listed company said it will not accept YTL Cement’s offer since any resolution at a shareholders’ meeting to approve the deal cannot be carried without the support of a majority of the shareholders.
The rebuff was not unexpected given the hostile stand-off between the subsidiary of the Holcim Group and YTL.
There were signs last November that all was not well between the two major shareholders after several directors resigned from Jurong Cement’s board due to differences between Holcim Investments and the YTL Cement.
Of the five directors who had resigned, two of them — Michael Yeoh and Joseph Benjamin Seaton — are employees of YTL Group, which had become a competitor of Holcim in the ready-mixed concrete market.
Holcim Investments is currently making a general offer of S$2.10 (RM5) a share to take Jurong Cement private. This is being opposed by YTL Cement, the second-largest shareholder with an interest of slightly over 20 per cent.
Last week, YTL Cement raised the stake by making a conditional offer of S$50 million to acquire the property, plant and equipment of Jurong Cement Bulk Terminal — a subsidiary of the mainboard-listed company.
This offer represents a US$39m premium over the assets’ net book value and adds 87 cents to Jurong Cement’s net asset value of US$1.76 per share as of September 30.
Holcim Investments has said of the deal: “Although the offer allegedly brings a one-off additional 87 cents per share to the net book value per share, we believe it fails to take into account the ongoing increase in operating costs which would arise from having to rent a third-party cement terminal and the potential impairment of the remaining operating assets in the company.”