CCM/Pharmaniaga .. July 2008

Sources say Khazanah Nasional Bhd is believed to be in talk to sell UEM Group Bhd’s stake in Pharmaniaga Bhd to CCM.

It is learnt that Khazanah, which owns UEM Group is in preliminary discussions with PNB, which has a 60.2% stake in CCM. The planned disposal is part of Khazanah’s move to streamline UEM Group’s operations by divesting its non-core assets. UEM Group holds 72.5% equity in Pharmaniaga.

If CCM acquires UEM’s entire 72.5% equity in Pharmaniaga, the deal will trigger a mandatory general offer for the remaining shares it does not own.

And if this were to happen, there is a possibility that PNB may want to take Pharmaniaga private. However, the deal may not be a cash deal. It could be a merger via an issue of shares.

CCM has cash reserves of RM219 million and a relatively low fearing of 0.88 times.

However, UEM Group Bhd MD and CEO said he was not aware of such negotiations at the UEM Group level. Officials from both CCM and Pharmaniaga claim they do not know of any merger or acquisition talks.