SET-listed WHA Corporation will be Thailand’s leading industrial property developer once its purchase of the country’s top industrial land developer is completed next month, saying the merger will be finished by next March.
Mr Somyos says the acquisition will allow WHA to expand fully into industrial estate and facilities development from being a developer of custom warehouses.
The months-long negotiations have finally been sealed, agreeing at a value of 43.7 billion baht for 22.53% of Hemaraj shares at 4.50 baht a share from Hemaraj’s major shareholders, WHA chief executive Somyos Anantaprayoon said.
The offer price is 1.4% higher than the stock’s closing price of 4.44 baht last Friday, with a plan to offer to buy out the remaining shares at the same price. Mr Somyos said the acquisition would allow WHA to expand fully into industrial estate and facilities development from being a developer of custom warehouses, distribution centres and readyto-use factories.
To finance its ambitious move, the company will sell rights offerings of up to 8.8 billion baht to existing WHA shareholders and borrow from banks, he said. The ratio and other details will be announced next month.
“The market capitalisation of WHA should more than double to 79 billion baht from 36 billion,” said Mr Somyos.
WHA has paid-up capital of 963 million baht with share equity of 3.5 billion.
Increasing capital by 8.8 billion baht will have a dilution effect of 25% on WHA’s shares, but the company will realise a net profit from Hemaraj of 2.5 to 3 billion, with 200% net profit growth expected to offset the dilution for investors in the form of dividend payments. Last year, WHA achieved revenue of 7.16 billion baht for a net profit of 1.46 billion. This year it expects revenue and net profit to be on par with last year.
Hemaraj had revenue of 12.1 billion baht in 2013 for a net profit of 4.3 billion. Sales for the first nine months of 2014 were 6.7 billion baht for a net profit of 2.5 billion.
Siam Commercial Bank, the financial adviser for the deal, along with WHA talked to foreign investors and foreign fund shareholders of Hemaraj, which are its major shareholders.
“We hope to have more than 50% of Hemaraj’s shares, with 40% from major shareholders and the rest from retail investors,” Mr Somyos said.
Meanwhile, WHA’s retail investors will see some special offers to encourage them to maintain their stakes by exercising their rights offerings such as discount prices for new IPO offers or free warrants.
Half of Hemaraj’s revenue comes from industrial land sales and recurring revenue from utilities as well as residential projects. Its price-to-earnings ratio is low at eight or nine times.
Sawasdi Horrungruang, a major shareholder and founder of Hemaraj, said he agreed to sell his shares because he received a good offer.
David Nardone, president and chief executive of Hemaraj, said the management structure would be unchanged.
To create synergy between the two companies, they may work on business cooperation if the major shareholders agree, he said.
Some unprofitable assets of Hemaraj will be liquidated after consolidation, as the company will try to repay its corporate bonds worth 15 billion baht issued earlier to cut financial costs.
WHA has recorded rapid growth as its market capitalisation doubled to 36 billion baht from 18 billion after listing in 2012. Next year it will aim at 80 billion.
Mr Somyos said despite the rapid growth, the company was cautious about funding sources for expansion to protect shareholders and maintain profit.
Shares of WHA and Hemaraj were suspended after news about the acquisition yesterday.
