Retail group Parkson Holdings Bhd has entered an agreement to dispose a 67.6 per cent stake in its Singapore-listed Parkson Retail Asia Ltd to its Hong Kong unit Parkson Retail Group Limited, pocketing S$228.51 million ($167.2 million) from the exercise.
The group said in a filing on Bursa Malaysia that its wholly-owned subsidiary East Crest International Limited, the 53.1 per cent owned subsidiary Parkson Retail Group, and wholly-owned Oroleon (Hong Kong) Limited had entered into an agreement for the internal re-organisation of the group structure.
The proposed disposal of 457,933,300 ordinary shares in Parkson Retail Asia at S$0.499 per sale share was approximately 6.2 per cent premium to the closing share price of the subsidiary of S$0.470 on July 14 2015, the last trading day prior to the announcement.
The disposal is intended to consolidate the retail business of Singapore-based Parkson Retail Asia, which has a presence in Southeast Asia, with that of Hong Kong-listed Parkson Retail Group, which operates a similar business in China.
In addition, the proposal will enable Parkson Holdings to raise cash proceeds, which the group proposes to utilise for business expansion, new investment opportunities and/or working capital, the group said.
Parkson part of the Lion Group conglomerate, which is helmed by Malaysian tycoon William Cheng.
Research analysts were largely in favour of the reorgranisation and share disposal.
RHB-OSK analyst James Koh said the move was positive for Parkson Holdings and the transaction may allow some value to surface.
Koh noted that the business environment for Parkson has been quite challenging, given that departmental store operations are mature in Malaysia and China, which forms the bulk of Parkson’s revenue.
Parkson Holdings’ share price has dipped to a nine-year low of MYR1.29 in yesterday’s half-day trade before securing a close 0.75 per cent higher at MYR1.34 for the holiday weekend here in Malaysia.