KUALA LUMPUR: Now that Tan Sri Ong Leong Huat is holding the reins of both PJ Development Holdings Bhd (PJD) and OSK Property Holdings Bhd, the path appears to be clear for the OSK Group supremo to finally merge the two medium-sized property companies and make it a force to be reckoned with in the property sector.
Talk late last year that he would take private his property arm, OSK Property, has resurfaced with a new twist – the merger of the two companies, fusing their strengths into a single entity that will give the big guns a run for their money.
Whether this new entity will remain listed also hangs in the balance, as Ong appears bent on taking his companies private.
Analysts to whom FocusM spoke did not deny the possibility of a merger between the two companies. Even Ong’s eldest son Ju Yan, currently COO and head of investment banking for OSK Investment Bank Bhd, did not dismiss the possibility, though he declined to comment on his father’s next moves.
“It is not appropriate for me to comment,” he tells FocusM.
While his attempt to take OSK Holdings Bhd private failed, Ong’s current focus is on OSK Ventures International Bhd (OSKVI), the third listed company under the OSK Group.
To-date, he has substantially increased his stake in OSKVI through his private vehicle OSK Equity Holdings Sdn Bhd, began snapping up shares since announcing the intention of a unconditional mandatory takeover in December.
Ong made the takeover offer at 58 sen apiece and 15 sen for the company’s warrants that he did not already own on Dec 30, 2013.
As of Feb 7, OSK Equity Holdings Sdn Bhd has a 55.7% stake or 109.01 million shares, a 6.17% increase from 49.53% or 96.95 million shares on Jan 2.
In OSK Holdings, Ong has a 0.85% direct and a 37.65% indirect stake via OSK Equities Holdings.
Looking at PJD and OSK Property, it will not be surprising if a merger happens, says a research analyst.
“Both companies have their strengths that Tan Sri Ong can take advantage of. A merger of these two entities will make it one to be reckoned with,” he adds.
The companies are not new to the industry and have their own niches and strengths, he says.
“Ong can definitely take advantage of PJD’s landbank to expand OSK Property’s portfolio; but a merger would pool their resources and give Ong the opportunity to streamline his operations,” he adds.
A property agent says a combination of PJD and OSK Property will make this entity “formidable”.
“While it will not be in the same category as SP Setia Bhd, this combination may strengthen the companies into a single entity should the economy take a turn for the worse,” he adds.
In November reports, PJD managing director Andrew Wong played down talk of a merger of the company and OSK Property.
At that time there was no direct connection between PJD and OSK Property to Ong and the idea of the two companies merging was at best just talk. The only link then was that Ong Ju Xing, one of Ong’s sons, is a director in both PJD and OSK Property.
But in December, Ong surfaced as a substantial shareholder in PJ Development, taking the place of older brother Wong Ah Chiew.
Ong now has an indirect stake of 21.4% in PJD through his private vehicle Dindings Consolidated Sdn Bhd, which directly holds a 20.43% stake or 92.52 million shares as of Dec 27, 2013.
Ong’s wife, Puan Sri Khor Chai Moi, is the largest shareholder of PJD, which owns the Swiss Garden hotel chain in Malaysia. She has a direct stake of 6.28%.
In OSK Property, Ong has a direct stake of 28% but total indirect control of 45.8% as of Jan 23.
OSK Property has several ongoing developments and projects, such as Pan’gaea and Mirage by the Lake in Cyberjaya, Gravitas Biz Park in Shah Alam and Opus Suites in Sri Damansara; while PJD’s include D’Majestic in Kuala Lumpur, YOU City in Cheras and Swiss Garden Resort Residences in Kuantan.
While OSK Property is not a subsidiary of OSK Holdings, Ong has said a real estate investment trust (REIT) is in the pipeline for OSK Holdings at some point, without committing himself to a timeline.
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