SINGAPORE Shares of CapitaMalls Asia CMAL.SI surged as much as 22 percent after Southeast Asia's biggest property developer CapitaLand Ltd (CATL.SI) offered to buy out minority shareholders in the Singapore-listed shopping mall operator.
CapitaMalls shares hit as high as S$2.21, the highest in about 14 months. Nearly 99 million shares were traded, almost 10 times its average full-day volume over the past 30 days. CapitaLand shares jumped 5.1 percent.
CapitaLand said on Monday it had offered S$2.22 per share for CapitaMalls, in which it already owns 65 percent. The S$3.06 billion ($2.45 billion) deal is aimed at simplifying CapitaLand's corporate structure and taking advantage of a discount valuation at CapitaMalls.
"We see this delisting as a rational move representing low hanging fruit for earnings and ROE (return on equity) growth," OCBC Investment Research said in a report.
The deal allows CapitaLand management to deploy significant capital to assets in CapitaMalls and contribute to earnings, OCBC said, raising its target price on CapitaLand to S$3.79 from S$3.50 and maintaining its "buy" rating.
(Reporting by Eveline Danubrata; Editing by Anand Basu)