CapitaLand buys China developer for US$2.2 billion

The acquisition will double the company’s China property portfolio from 1.4m sqm to 2.8m sqm.
 

Under this arrangement, CapitaLand, through its subsidiary CapitaLand China Holdings will own the entire stake of Orient Overseas Developments (OODL) and will acquire a real estate business with a portfolio of seven sites located in Shanghai, Kunshan and Tianjin. OODL is a Hong Kong incorporated holding company and a wholly-owned subsidiary of OOIL, which is listed on the HK stock exchange.
 

The transaction’s total consideration of US$2.2 billion comprises a US$1.046 billion for the assignment and transfer by OOIL of the shareholder's loan, and the balance of US$1.154 billion for sale and transfer of all the issued and paid up share capital.
 

The acquisition will be funded from CapitaLand’s existing cash, a significant portion of which arose from the IPO proceeds of CapitaMalls Asia.
 

The acquisition is expected to be completed by the end of 1Q 2010, subject to the approval of OOIL shareholders.
 

Dr Richard Hu, Chairman of CapitaLand Group, said: “We had prepared the company’s
financial strength well in advance to take advantage of such rare opportunities. It also
fits into our stated goal of growing our asset size in China from the present 28% of total assets to 45% over the next five years as we remain very confident of the long term future of the country.”
 

Liew Mun Leong, President and CEO of CapitaLand Group, said the group plans to acquire high quality sites in prime locations, either next to or near mass rapid transit (MRT) stations at attractive value. He says, “The major assets are in the city centre where there is currently very limited supply of such land in the market. Most of the sites have planning and land use approval while some sites have construction permits in place. This is a large development advantage in China and should command a price premium.”