Malayan Cement Berhad (MCB) to Acquire Strategic Assets from Parent YTL Cement Bhd for Rationalisation and Optimisation Plan

KUALA LUMPUR, 12 May 2021 — Today, Malayan Cement Berhad (MCB) entered into an agreement with its parent company YTL Cement Berhad, a subsidiary of YTL Corporation Berhad, for the purchase of its entire cement and ready-mixed concrete operations in Malaysia for a total consideration of RM5.158 billion.

Under the agreement, MCB will acquire 12 companies involved in cement and ready-mixed concrete businesses, as well as marketing and plant management activities. All of these companies have an established track record of operational profit.

The total consideration of RM5.158 billion, which is subject to adjustments at point of completion, will be settled via RM2.0 billion in cash, RM1.408 billion through the issuance of 375.5 million new ordinary shares in MCB and RM1.75 billion through the issue of 466.7 million new irredeemable convertible preference shares (ICPS) in MCB.

The issue price for the new MCB shares and ICPS to be issued has been fixed at RM3.75 per share/ICPS. This was the price per share paid by YTL Cement for the acquisition of its 76.98% equity interest in MCB in 2019, which was premised on the potential synergies that would arise from the integration of businesses between the two groups.

Since the acquisition in 2019, the two groups have made significant strides in streamlining their operations and maximising efforts on their logistical, distributional and marketing fronts. This proposed transaction is the natural progression towards increasing the size of MCB’s cement and ready-mixed concrete businesses, bolstering its profitability and enhancing its value.

YTL Cement will consolidate similar operating businesses under a singular umbrella. This is expected to further improve operational efficiencies and business outcomes. By leveraging shared expertise, experience, and resources, MCB aims to eliminate overlapping functions whilst continuing to deliver seamless solutions to customers, achieving economies of scale, and enhancing their market presence.

The partial settlement of the consideration through the issuance of new shares and ICPS rather than wholly in cash is intended to enable MCB to optimise its cash reserves and gearing levels. The strategic realignment will foster value creation for shareholders of MCB and allow investors to invest directly on a focused basis in Malaysia’s leading building materials company.

This exercise will also significantly reduce related party transactions and conflicts of interest between MCB and YTL Cement. The intention is to improve governance across both groups and lower the administrative and compliance costs incurred through the monitoring and management of these issues. 2

The proposed transaction is subject to approval by the shareholders of MCB to be obtained at an extraordinary general meeting to be convened.

YTL Cement’s shareholding in MCB is expected to increase to approximately 78.58% (from 76.98% currently) upon completion of the proposed transaction and the ongoing private placement of up to 85 million new MCB shares announced on 15 April 2021, assuming no conversion of the ICPS to be issued. Therefore, MCB will apply to Bursa Malaysia Securities Berhad for approval for a lower public shareholding spread of 20% in due course.