Cosco Shipping International has launched a $490 million cash buyout of logistics firm Cogent Holdings and plans to buy an Indonesian shipping company firm for $14 million, also with cash.
The proposed deals, which follow Cosco's move to divest its shipyard business, were announced separately yesterday alongside its third-quarter results.
They will likely cement analyst speculation that the logistics business could be Cosco's new focus.
Its voluntary conditional buyout of Singapore-listed Cogent is priced at $1.02 a share - about 31/2 times the net tangible asset per share of 29.8 cents as of the end of June.
Cosco said the price is premised on tapping into the logistical needs in Singapore and Malaysia where Cogent has a strong presence.
The offer is a 5.2 per cent premium for shareholders based on the last transacted price of 97 cents on Thursday. The counter was last traded at 99 cents yesterday before a trading halt was called pending the announcement.
Phillip Securities Research analyst Richard Leow is disappointed... because the offer is lower than his $1.12 target price for Cogent. And he said he is "surprised" that the offer is "much lower" on a price-to-earnings basis than the recent buyout offer for another company with similar business - Poh Tiong Choon Logistics.
But Phillip Securities Research analyst Richard Leow is disappointed, firstly because the offer is lower than his $1.12 target price for Cogent.
And he said he is "surprised" that the offer is "much lower" on a price-to-earnings basis than the recent buyout offer for another company with similar business - Poh Tiong Choon Logistics. He noted further that Cogent has yet to report its results for the three months to Sept 30.
Cosco will fund the conditional offer with internal resources. Its financial adviser for the deal, Bank of China, will extend a $350 million loan facility to part-finance the takeover.
It has already locked in an irrevocable undertaking from four individuals - Cogent's executive chairman and his spouse, the chief executive and the managing director, who collectively hold 84.33 per cent of the company.
Separately, Cosco announced the proposed acquisition of a 40 per cent interest in Indonesian firm PT Ocean Global, which it said will enable it to own a profitable business that is complementary and will provide an opportunity to expand further into South-east Asia's logistics sector.
It signed a share sale and purchase agreement with sister company Cosco Shipping (South East Asia), which is wholly owned by China Cosco Shipping Corp and already owns 49 per cent of PT Ocean Global.
Cosco's controlling shareholder, China Ocean Shipping (Group) Company, is wholly owned by shipping giant China Cosco. Hence, the proposed deal is deemed an interested party transaction.
Cosco Shipping reported net profit of $24.8 million for the three months to Sept 30 from a loss of $102.3 million a year earlier.
Revenue fell 29 per cent to $6.99 million owing to a fall in shipping revenue from a smaller fleet of bulk carriers.
Earnings per share stood at 1.1 cents from a loss per share of 4.57 cents a year earlier while net asset value per share was 11.52 cents, up from 15.01 cents as of Dec 31.
Trading in Cosco Shipping shares was halted around noon yesterday pending the offer announcement, with the counter last traded at 30 cents.