* Shares of Tradewinds dropped 23 percent year-to-date
* Low share prices, cheap financing drive buyouts
By Yantoultra Ngui
KUALA LUMPUR, Dec 26 A Malaysian tycoon's 1.5
billion ringgit ($489.40 million) buyout offer for commodities
firm Tradewinds Bhd underscores a privatisation drive
in Southeast Asia as low share prices and cheap finance entice
dealmakers to snap up assets.
Malaysia's sixth richest man, the politically-connected Syed
Mokhtar Al Bukhary, offered to buy the sugar, rice and palm oil
producer at 9.30 ringgit per share, representing a 20 percent
premium to last week's closing price. The shares surged to a
five month high of 8.99 ringgit on Wednesday.
The deal would bring Malaysia nearer to regional rival
Singapore, which this year leads Southeast Asia in management
buyouts, including those of miner Sakari Resources Ltd
and Asia Pacific Breweries Ltd.
Shares in Tradewinds, which has a near-monopoly over the
rice and sugar industry in Malaysia, have lost nearly 23 percent
this year. As well as suffering from lower commodity prices,
investors have grown nervous about government-linked companies
like Tradewinds, ahead of what is expected to be Malaysia's most
fiercely contested election, due early next year.
"One's fear is an opportunity to another," said a source
familiar with the deal involving Tradewinds, which controls
national rice distributor Padiberas Nasional and
Syed Mokhtar would also take both of those firms private as
part of the Tradewinds deal.
Tradewinds traded at a historical price-to-earnings ratio of
8.09 times, compared with peers PBB Group Bhd at 17.78
times and MSM Malaysia Holdings Bhd at 12.55 times,
according to Thomson Reuters data.
"The counter is traded so much lower as compared to its
peers," said another source with knowledge of the deal, who
declined to be named as he was not allowed to speak to the
media. "There's a need to enhance value."
FRIENDS IN HIGH PLACES
A former rice trader turned reclusive tycoon, Syed Mokhtar
has made headlines this year for a slew of corporate deals,
starting with a buyout of ailing national carmaker Proton
Holdings in January.
The dealmaker, who counts former prime minister Mahathir
Mohammed and current deputy premier Muhyiddin Yassin as close
friends, also listed Gas Malaysia in a $230 million
share sale in 2012.
He plans to list power producer Malakoff Bhd next year, a
move which analysts say might be a clue about his plans for
Other wealthy businessmen in the region have also taken
companies off the markets this year as they seek to expand their
businesses using loans at low interest rates.
Central banks in the region and beyond have eased policy to
support growth as the euro zone's debt problems, a sluggish
recovery in the United States and slower growth in China weigh
on demand for Asian goods. In November, Malaysia's central bank
kept its key interest rate unchanged at 3.0 percent, the ninth
consecutive policy meeting at which rates were unmoved.
Earlier this month, Malaysian businessman Quek Leng Chan
offered to privatise conglomerate Guoco Group in a
$1.1 billion deal.