Double-edged deal

• Business leader Dhammika Perera sells 51% personal stake in Amaya Leisure to Hayleys Group for Rs. 2.6 b and buys 9% more of the latter for same amount
• Deputy Chairman’s control in Hayleys tops 40%;
• Hayleys Group firms pay Rs. 107 per Amaya share after getting independent report valuing share at Rs. 160; to announce mandatory offer shortly to acquire balance 49% stake

Business leader Dhammika Perera yesterday effected a master deal buying further control in diversified blue chip Hayleys Plc which in turn bought his personal controlling stake in Amaya Leisure.

In separate transactions with identical value of Rs. 2.6 billion each, Hayleys Plc and three other Group firms collectively bought 51% stake or 24.5 million shares in Amaya Leisure at Rs. 107 each. In return Dhammika bought 7 million shares or 9.3% stake in Hayleys at Rs. 380 per share, same as the mandatory offer he made a few months back, from several Group companies.
The strike price for Amaya deal was three times the net asset value of Rs. 34 as at June 2011. On Tuesday Amaya had closed at Rs. 110. Last week it closed at Rs. 106 whilst its all time high (within 52-weeks) is Rs. 140 and the lowest Rs. 80. In June quarter its highest was Rs. 125.
Analysts claimed that Hayleys taking over Amaya had been on the cards for a while and it was part of the strategy of Dhammika after he took control. However this and other move of buying out holdings by subsidiaries in parent had been resisted by some of the old independent directors in Hayleys Board, three of whom resigned by June.
However since the buy will involve a mandatory offer Hayleys Board had recently got an independent valuation on Amaya Leisure from the Merchant Bank of Sri Lanka (MBSL), which had valued the net assets at Rs. 160 per share. Amaya hit an intra-day high of Rs. 120 before closing at Rs. 107.70, down by Rs. 2.30.
Among companies who sold stakes in parent were Dipped Products holding 4.71% stake (3.5 million shares at Rs. 380 each) for Rs. 1.3 billion booking hefty capital gains. Following the sale Dipped Products gained by 11.2% to close at Rs. 125.60.
By end June, Dhammika and connected party Royal Ceramics held 22.8 million shares or 30.4% stake in Hayleys Plc. On 18 August via Vallibel One, he picked up another 1.24% or 0.9 million shares at Rs. 360 each. With yesterday’s purchases total control of Dhammika who is Deputy Chairman of Hayleys is now 40% with direct personal holding amounting to 34%.
Hayleys share price peaked to a high of Rs. 382, before closing at Rs. 381.40, up by Rs. 18.80.
Following Hayleys’ purchase of Amaya, the latter is expected to manage the city five star Ceylon Continental (in which Hayleys owns 51%), and Hunnas Falls. Of the 51% stake in Amaya, Hayleys now own 26.6%, Dean Foster owns 21.3%, Toyo Cushion 1.7% and Volanka Exports 1.3%.
Amaya has 1,620 shareholders of which 1,519 are individuals with 1,287 owning a mere 0.5% stake. Among institutional shareholders are Ceybank Unit Trusts (slightly over 10%), EPF 8.5%, Mercantile Investments 4.67% whilst Director Lalin Samarawickrama owns 8%.
In the financial year ended on 31 March, 2011, Amaya posted its best ever results with turnover of Rs. 757 million, up from Rs. 570 million in the previous year and after-tax profit of Rs. 467.4 million, up from Rs. 70 million in FY2010. Shareholders’ funds amounted to Rs. 1.6 billion. Return on equity and return on shareholders’ fund last year were 29% each.
Dhammika’s combined deals generated Rs. 5.2 billion turnover accounting for 61% of the days figure thereby propelling the Bourse overall amount to a staggering Rs. 8.7 billion, the highest since October last year.