IWH-IWC proposed merger aborted

PETALING JAYA: The proposed merger between Iskandar Waterfront Holdings Sdn Bhd (IWH) and Iskandar Waterfront City Bhd (IWC), both controlled by Tan Sri Lim Kang Hoo, has been aborted as the deal is “no longer consistent with the benefits and intentions which it was originally envisaged”.
The deal which was announced in March this year, hit a major stumbling block when IWH lost its most coveted project as master developer of RM200 billion Bandar Malaysia project, in May. This left it with over 7,400 acres of land in Kuala Lumpur and Johor Baru, with an estimated open market value of RM30 billion.
At the time IWC and IWH were still adamant the deal would not be derailed.
Lim in its stead, has now proposed a new deal, involving Ekovest Bhd taking over the shares IWH does not own in IWC for RM1.50 per share. Lim is offering one Ekovest share for one IWC share. IWC last traded at RM1.40 a share, while Ekovest at RM1.16 a share. Both stocks have been suspended from trading in anticipation of the announcement.
As at last Friday, IWC and Ekovest’s market capitalisation stood at RM1.17 billion and RM2.48 billion respectively.
Lim has advised that IWH will not to sell its 38% take in IWC. Lim owns a 63% interest in IWH, while Kumpulan Prasarana Rakyat Johor owns the rest.
Ekovest said its board of directors will deliberate on the proposal letter and decide on the next course of action.
“All relevant parties will use their best endeavours and efforts to negotiate in good faith documentation and arrangements in relation to the proposed acquisition on or before Nov 30, or such other extended date as may be mutually agreed between the parties in writing.”
Ekovest did not mention if Lim plans to maintain the listing status of IWC. Astramina Advisory Sdn Bhd has been appointed the financial advisor for the proposed acquisition.
Both IWC and Ekovest are involved in construction and property development.
Recall that the proposed IWH-IWC merger was to see IWH taking up the remaining 61.7% equity in IWC for RM1.50 per share, to be satisfied via the issuance of IWH shares on the basis of one new IWH share for one existing IWC share, to create a master property developer with over RM30 billion worth of land.
However, IWC told Bursa Malaysia today that it had been informed by IWH that the respective vendors of the joint properties will not be participating in the proposed restructuring exercise, resulting in an unexpected substantial variation and reduction to the scale and scope of the proposed restructuring exercise.  
As the deal is not expected to provide the intended benefits, it said the parties are unlikely to be in a position to fulfill the conditions precedent contemplated in the merger agreement within the originally anticipated timeframe for fulfillment/obtainment.
“Accordingly, premised on the above, the company and IWH have agreed to mutually terminate the proposed merger scheme contemplated and set out under the merger agreement,” said IWC.