United Malacca takeover offer undervalues landbank

PETALING JAYA: CIMB Research expects the RM6.10 per share conditional mandatory takeover offer (MGO) for United Malacca Bhd may undervalue the plantation group’s landbank.

In a note to clients, the research house said it viewed the offer as unattractive, representing only a 2.2% premium to the planter’s pre-announcement closing price.

At RM6.10 per share, the upstream planter is valued at RM1.28bil, implying a historical price-to-earnings ratio of 8.8 times for the financial year ended April 2026, a price-to-net asset value ratio of 0.81 times and an enterprise value of RM33,449 per ha.

CIMB Research said these valuations do not fully reflect the potential value of United Malacca’s estates in Melaka, Negri Sembilan and Segamat, Johor, which have net book values of RM88.7mil, RM44.5mil and RM54.9mil respectively.

The estates are carried at relatively low book values, suggesting potential upside from future land monetisation.

It also noted that United Malacca had net cash of RM312.8mil, equivalent to RM1.59 per share, as at July 31, providing additional balance-sheet support.

While the RM6.10 per share offer provides near-term share price support and an exit opportunity for minority shareholders, CIMB Research said investors with a longer-term investment horizon could benefit from the potential monetisation of United Malacca’s landbank.

The offer is conditional on the offerors and their persons acting in concert (PACs) collectively securing more than 50% of United Malacca’s voting shares.

Thus, with their combined shareholding at 47.66%, they need acceptances for only another 4.92 million shares, equivalent to 2.34% of the issued share capital, for the offer to become unconditional.

The offerers have indicated that they intend to maintain UMB’s listing status and will not pursue compulsory acquisition, allowing minority shareholders to remain invested.

The takeover offer was triggered after Prosper Trading Sdn Bhd acquired a 13.44% stake in UMB from Great Eastern Life Assurance (Malaysia) Bhd for RM171.9mil, or RM6.10 per share, on Oct 12, 2026.

The acquisition of 28.19 million shares raised Prosper Trading’s direct shareholding from 5.82% to 19.26%, while the collective stake held by Prosper Trading, joint ultimate offerers Tee Kim Tee and Tee Cheng Hua, and their PACs increased from 34.22% to 47.66%.

This triggered a conditional MGO for the remaining 109.8 million shares, representing 52.34% of United Malacca’s issued share capital, at RM6.10 per share in cash.

The maximum additional cash consideration is RM669.8mil, with the offerors confirming that they have sufficient financial resources to meet full acceptance.

CIMB Research maintained its “buy” call on the stock with an unchanged target price of RM6.93, implying 13.6% upside from the offer price.