Esmart Holdings says it will buy a 74.71% controlling stake in DFZ Capital Bhd and the entire equity interest of Darul Metro Sdn Bhd from Altan Holdings Bhd in a reverse takeover offer (RTO).

Under the RTO, Esmart will buy 156.86 million shares of DFZ at RM470.59 million ($201.7 million), equivalent to about RM3 a share. It will pay also pay RM200 million for the 1 million shares of Darul Metro.

In return, Esmart will issue 18 billion new shares at 1.5765 cents each to pay for the acquisition.

It will also issue 1.8 billion free warrants on the basis of one warrant for every ten such shares, exercisable at 1.75 cents. Each such warrant will confer the right to subscribe to one new share when exercised.

The issue price of 1.5765 cents represents a premium of 5.07% over the last traded price of the shares of the company of 1.5 cents.

The exercise price of 1.75 cents of each warrant represents a premium of 16.67% and 11% over the latest traded price of the shares of the company of 1.5 cents and the issue price of 1.5765 cents respectively.

Following the completion of the proposed acquisition, Esmart will trigger an obligation under the Malaysian Code on Take-overs and Mergers, 1998 to undertake a mandatory general offer for the remaining shares of DFZ not already held by the company and its parties acting in concert.

Altan Holdings and its group are principally involved in trading of duty-free goods and non-dutiable merchandise through DFZ and its subsidiary companies.

DFZ has a total of 25 duty-free outlets/complexes and wholesale outlets located at various locations throughout Peninsula Malaysia including Johor Bahru, Bukit Kayu Hitam, Kuala Lumpur International Airport, Padang Besar, Langkawi and others.

Darul Metro owns one of the largest duty free zone property in Malaysia — the ZON Johor Bahru, a complex with a gross floor area of 1.6 million square feet comprising convention halls, hotel, shopping areas and a multi-storey carpark, customs and immigration checkpoint and office building and ancillary buildings spread out over 14 acres of prime waterfront land. It enjoys a unique status as the exclusive downtown duty free area in Johor Bahru.