CMS to Acquire CMS Roads and CMS Pavement Tech
Monday, 28 February 2011, Kuching – Cahya Mata Sarawak Berhad (CMS) announced this evening that its wholly-owned subsidiary, CMS Works Sdn Bhd, had entered into a conditional Share Sale Agreement (SSA) with Putrajaya Perdana Berhad (PPB) for the Proposed Acquisition of 100% equity in CMS Roads Sdn Bhd and CMS Pavement Tech Sdn Bhd. The purchase of the two companies will total RM82.01 million and will make CMS Roads and CMS Pavement wholly-owned subsidiaries of CMS Works and indirect wholly-owned subsidiaries of CMS upon completion of the Proposed Acquisition.
CMS Roads provides roads maintenance and related activities. It is currently undertaking a 15-year concession awarded by the Sarawak Government to manage and maintain approximately 4,626 km of State roads until the year 2017.
Meanwhile CMS Pavement is a specialist provider of pavement works covering construction, rehabilitation and maintenance. Its core business is rehabilitation of existing road pavement by cement and bitumen stabilization using recycling techniques.
In the Announcement to Bursa Malaysia, CMS described the rationale for the acquisition of the 2 companies as benefitting its construction division’s road management, maintenance, rehabilitation and construction expertise. In addition, the consolidated financial performance of the CMS Roads and CMS Pavement Tech will provide a steady stream of cash flow from the management and maintenance of State roads in Sarawak up to the end of 2017, with additional earnings visibility to CMS Group.
In terms of new business, CMS is hopeful that Government spending on infrastructure and basic amenities as set out in plans under the 10th Malaysia Plan and SCORE will have a positive impact on CMS Roads and CMS Pavement, especially spending earmarked for SCORE projects which includes budget for more access roads in Sarawak.
Development projects implemented by the Government will further increase the potential of the construction and building materials-related industries. In 2010, RM4.7 billion had been allocated for road and bridge projects as well as RM2.6 billion for water supply and sewerage services.
The Proposed Acquisition of CMS Roads and CMS Pavement Tech is expected to be completed by the second quarter of 2011.
