Hayleys Bids Farewell To D*MO

[Devinda_Z]

The press reports that Hayleys Group is to divest its 28% stake in Diesel and Motor Engineering (D*MO) which holds the agencies for Mercedes, Tata and Chrysler in the island, along with a host of other brands such as Bosch , Osram & so on.

From the time of listing in the Colombo Stock Exchange, D*MO had been controlled by both Hayleys and the "Pandithage/Algama/Peries Group", acting "as a single group" These families hold around 46% of the issued shares of D*MO PLC.

D*MO has stated that said Hayleys, which holds 3,397,611 shares of D*MO (28.08 percent) has entered into an agreement with director Ranjith Pandithage on the 11th of June 2008 to divest thier entire shareholding of D*MO to Pandithage or his nominees,within the Pandithage/Algama/Peries Group.

16 Jun, 2008

[Devinda_Z]

LBO Report courtesy Yahoo News - http://au.news.yahoo.com/080616/3/17aoa.html

D*MO last sold in the market at 133 rupees (US$1.23) before trading was halted after the announcement.

At 133 rupees the 3.398 million shares held by Hayleys is worth 451 million rupees (US$4.2 million) in the secondary market.

The firm was first acquired by Hayleys at 67 million rupees and post acquisition profits amount to 428 million rupees, according to published data.

This puts a value of around 495 million rupees in the books of the parent or about 146 rupees a share.

The net asset value of a D*MO share in its own books is about 137 rupees, analysts said. It has property in Jethawana Road in Colombo 14 which was last valued in August 2004.

The directors and spouses of the firm also held around 28 per cent of D*MO stock, according to published data.

Last year the firm earned 205 million rupees in profits.

[GTAm]

Yep its a hot topic in the market. Good move by Heyleys, holding D*MO which is in a declining industry does not bring any real benefit to the group. And Hayleys core biz strategy is manufacturing and enterprise that are very beneficial for the country.

I believe the agreement means that there's can't be a rival bid even if it is higher. On the face of it, it looks like sell D*MO, Hold Heyleys if you've got any shares!

[Devinda_Z]

  GTAm said:

Yep its a hot topic in the market. Good move by Heyleys, holding D*MO which is in a declining industry does not bring any real benefit to the group. And Hayleys core biz strategy is manufacturing and enterprise that are very beneficial for the country.

I believe the agreement means that there's can't be a rival bid even if it is higher. On the face of it, it looks like sell D*MO, Hold Heyleys if you've got any shares!

yes thats true but apparently there is some kind of regulatory hurdle that needs to be over come with regard to a single party/individual gaining over 30% stake in a listed company...

With regard to Hayleys , they have been on busy trimming their portfolio and getting rid of all the non value adding SBU's....

some say all this might have to do with wanting to deal with their corporate debts which amount to Rs. 8 Billion!

this must be another step in Hayley's restructuring plan - the first was possibly thier move to divest thier consumer durables division earlier this year (or was it late last year )

[GTAm]

  Devinda_Z said:

yes thats true but apparently there is some kind of regulatory hurdle that needs to be over come with regard to a single party/individual gaining over 30% stake in a listed company...

Yes this is the tricky part.... If they anyone/party acquires more than 30% they trigger off the SEC's mergers and aquisition code. Which means they (the buyer/s) have to offer all the other shareholders the right to sell their shares at the same price by a stipulated date.

But IMO these buyers don't have that kind of cash.....So they will need a partner. And the only way it will make sense for a potential partner is if there's going to be expansion and change in the company that can make the company grow fast - Like say an aasembly plant for example. profits have been falling in the motor sector in general, so its a tall ask right now.........