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MMC consolidates hold on Malaysian ports with takeover of NCB

MMC consolidates hold on Malaysian ports with takeover of NCB
MMC Corp is set to widen its grip on Malaysia's port sector with its latest acquisition of a majority stake in NCB Holdings for MYR1.1bn ($258.5m) in cash.

MMC Corp said in a stock market announcement that it had, through its unit MMC Port Holdings, agreed to buy a 53.4% stake from state funds Permodalan Nasional Bhd (PNB) and AmanahRaya Trustees Bhd at MYR4.40 a share, raising its stake in the port operator to 83.55% and triggering a mandatory general offer to buy out the remaining minority shareholders and leading to NCB's eventual delisting.

The deal values the holding company of Northport, the smaller of Port Klang's two container terminals, at MYR2.07bn and gives MMC a foothold in every major container port on the west coast of Peninsular Malaysia. It will however increase the group's gearing as it plans to fund the purchase with bank borrowings.“The proposed acquisition is in line with the initiative of the board to make further strategic investments in MMC’s core business of the ports and logistics division, to strengthen the financial position of the MMC group.

“It expects the proposed acquisition to contribute positively to its future earnings and will help in maintaining its position as a key player in the ports industry in Malaysia, as well as providing a good opportunity for the MMC group to further strengthen its foothold in NCB, an established company in the port industry,” MMC said.

The deal is expected to be completed by the first quarter of 2016. MMC has been gradually increasing its interests in NCB, since it first acquired a 15.73% stake from national shipping line MISC in December 2014. This year, it acquired another 5.32% and 9.08% share from Port Klang Authority and Kumpulan Wang Persaraan respectively. Prior to the acquisition, MMC’s stake in NCB stood at 30.13%. The deal was deemed a related-party transaction as PNB owns 21.14% of MMC.

MMC and its various operating subsidiaries currently control Penang Port in the north and in the south, the bulk terminals at Johor Port and the major southern container terminal of Port of Tanjung Pelepas.