BY WONG WEI-SHEN

Ong: ‘We will start immediately. The S&P (sales and purchase) will be completed very soon.'

KUALA LUMPUR: Shareholders of OSK Holdings Bhd have given the green light for the merger with OSK Property Holdings Bhd and PJ Development Bhd, valued at RM1.71bil.

The move will see OSK Holdings emerging as a first-tier property company in Malaysia.

“We will start immediately. The S&P (sales and purchase) will be completed very soon,” group managing director Tan Sri Ong Leong Huat said.

As a combined entity, OSK Holdings would have a total gross development value of RM13.3bil.

It will have landbank totalling 1,297 acres in Malaysia and and another five acres in Melbourne, Australia. The company has about RM1.5bil in unbilled sales that will provide a steady pipeline of revenue growth. It also has new projects coming on stream.

Despite market concerns of a slowdown in the property market, Ong noted that prices had been relatively stable.

“We didn’t see prices dropping anyway. The margins here are relatively low at around 10% to 20% unlike other countries where it’s 30% to 40%. We are still cheaper than the rest of the world even though we are semi developed,” he said. He added that “political bickering” had led to a lack of confidence among investors, which in turn resulted in the currency falling to an unnecessarily low.

“The economy has strong fundamentals compared with many other countries in this part of the world. There’s a reason for that but that reason won’t last forever. It will be overcome and we will be able to recover in the not too distant future. The Malaysian economy is generally quite stable,” Ong said.

He said the weakened ringgit could mean that its property was more attractive, especially to foreign buyers.

“For properties for foreign buyers, I think our ringgit is cheap, which makes it cheaper for people of countries with currencies that are relatively strong. I think that will also attract people to invest.

“Whatever goes down must come back up,” he said.

The combined earnings profile will see 40% from property, another 40% from financial services and the remaining 20% from hotels and building materials.

Apart from its 9.96% stake in RHB Capital Bhd, OSK Holdings has the money lending business, which according to Ong, is contributing a fair amount of profit.

Post-merger, he said, there would be no need for retrenchment of any staff. Rather, the company intends to look to increase its talent base, from 2,000 currently.

Under the exercise, OSK Holdings would acquire 72.4% of shares in OSK Property for RM346.4mil or RM1.95 per OSK Property share. It will also buy a 31.6% equity interest in PJ Development for RM223.64mil or RM1.56 per share.

It will also make a general offer to acquire the remaining shares and outstanding warrants in OSK Property and PJ Development from minority shareholders, which could result in RM1.14bil cash, assuming shareholders opted for cash. It expects to complete the whole exercise by September 2015.