Watchdog wants probe into SP Setia land buy

The Minority Shareholder Watchdog Group says SP Setia would need shareholders' approval for the land purchase, which was done amid an offer by Pemodalan Nasional Bhd.

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Kuala Lumpur: The Minority Shareholder Watchdog Group (MSWG) has asked the Securities Commission to examine if SP Setia Bhd needs to get shareholders approval for a recent land buy. MSWG said under normal circumstances, SP Setia would not have to do so as the percentage ratios of the deal are below the 25 per cent limit and is a normal course of its property business. However, under the Malaysian Code on Take-Overs and Mergers 2010, MSWG said SP Setia would need shareholders' approval for the purchase, which was done at the same time as a mandatory general offer made by Pemodalan Nasional Bhd. "Section 38 of the code states that the board of directors should not undertake any action or transaction of material amount without obtaining the approval of the shareholders at a general meeting as then, the shareholders would be denied the opportunity to decide on the merits of any bona fide take-over offer," said MSWG chief executive officer Rita Benoy Bushon in a statement. "In addition, the percentage ratio as disclosed by SP Setia in its announcement for the proposed land transaction was 12.82 per cent. And, in the absence of any other information, we are of the view that this hits the materiality threshold of 10 per cent, as defined under paragraph 1.4 of Practice Note 38 of the Malaysian Code on Take-Overs and Mergers 2010." As at press time, SP Setia did not respond to media queries or clarify the matter with an announcement to Bursa Malaysia. Last week, PNB offered to buy the rest of SP Setia shares and warrants it does not own for RM3.90 and 91 sen each, respectively. SP Setia said the takeover offer "fundamentally undervalues" the company and will seek rival bidders. Five days later on Monday, the company announced its plan to buy a site in Semenyih for RM381 million. The purchase consideration for the Semenyih land was RM13 per sq ft, about 70 per cent higher than the price SP Setia paid for the nearby Beranang land just two months ago. The Semenyih land, which is adjacent to its current development, the Beranang Land, is to be developed into a township with an estimated gross development value of RM4 billion.