December 26, 2012 / 6:30 AM / 5 years ago

UPDATE 1-Malaysia tycoon's Tradewinds offer adds to SE Asia buyout spree

* Shares of Tradewinds dropped 23 percent year-to-date

* Low share prices, cheap financing drive buyouts

By Yantoultra Ngui

KUALA LUMPUR, Dec 26 (Reuters) - 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 Tradewinds Plantations.

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.”


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 Tradewinds.

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.

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