PLUS Expressways gets $8.3 billion offer, bid war looms

KUALA LUMPUR (Reuters) - Malaysia's PLUS Expressways PLUE.KL on Monday received a 26 billion ringgit ($8.3 billion) offer from local firm Jelas Ulung Sdn Bhd, making it potentially the country's second-largest M&A deal.

Unlisted Jelas Ulung’s offer tops a 23 billion ringgit approach by Malaysia’s UEM Group and Employees Provident Fund and could spark a takeover battle for the country’s largest highways operator.

Jelas Ulung’s offer of 5.20 ringgit a share in cash is 13 percent more than the UEM-EPF offer and 19 percent above the 4.36 ringgit closing price of PLUS shares on Monday.

In a letter to the board of PLUS, Jelas Ulung said BOCI Asia Ltd, a subsidiary of Bank of China Limited 601988.SS, will support the financing of the purchase, PLUS added.

Jelas Ulung could not be reached for comment.

“China has always expressed interest in getting into Malaysian projects. This may be a way in,” said Abdul Jalil Abdul Rasheed, head of equities at Aberdeen Asset Management.

“But the offer is still very sketchy on details. The hope is that minority shareholders do not lose out in this takeover from an equity standpoint.”

Analysts were concerned the deal could end the same way as the battle to acquire QSR Holdings QSRB.KL which fizzled out after the owner of KFC KFCK.KL rejected competing offers, saying it would continue as a standalone company.

The new offer for PLUS highlights the increased interest in Malaysian construction and infrastructure firms, which are taking on projects in countries like the Philippines and India.

Earlier in the day, MTD Capital MTDC.KL, which runs the lucrative South Luzon Expressway in the Philippines, received an $832.9 million offer from a consortium of four local firms to take it private.

Jelas Ulung’s offer values PLUS at about 22 times forward earnings compared with its current valuation of 17 times. Shares of the company have dropped more than 2 percent since UEM-EPF made its offer.

“The board will deliberate on the terms of the offer and decide on the next course of action, taking into consideration the offer from UEM Group Berhad and Employees Provident Fund Board,” PLUS said in a statement to the stock exchange.

EPF has a 12.3 percent stake in PLUS while UEM Group, together with its parent -- sovereign wealth fund Khazanah Nasional Bhd -- holds 55.4 percent of the firm, which operates the lucrative North-South highway running from the northwestern tip of Malaysia to Singapore.

UEM-EPF’s offer has a clause that allows PLUS to consider competing offers.

Malaysia said in its 2011 budget that it would put on ice for five years planned toll rate increases at four of PLUS’s highways and that it would not compensate the company.

Malaysia's biggest M&A deal came in 2007 when a trio of plantations companies merged in a 31.7 billion ringgit move to form Sime Darby SIME.KL, now the country's third-largest firm by market value.

($1 = 3.133 Malaysian Ringgit)

Reporting by Niluksi Koswanage and Saumyadeb Chakrabarty; Editing by Lincoln Feast, Royce Cheah and David Hulmes