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By Dilina Kulathunga
Integrated infrastructure and engineering solutions provider, MTD Walkers PLC yesterday said its board gave the approval to acquire Wincon Development Ceylon (Private) Limited (Wincon), the local unit of the Malaysian property development company, Metacorp Berhad (Metacorp), for a consideration of Rs.2.17 billion.

" We wanted to get into the real estate sector for quite some time and I believe the acquisition will open up a window of opportunity in this sector "

The acquisition price will value Wincon’s share at Rs.4.01 and the deal will see MTD Walkers offering cash to Wincon to buy the 100 percent stake.
The management is currently considering the financing options as the internal cash reserves are only Rs.173.8 million as of June 30, 2014 but the receivables are over Rs.7.0 billion.    

The acquisition will enable the local construction sector giant to enter into the buoyant yet intensely competitive property development and real estate sector in the country.  

“We wanted to get into the real estate sector for quite some time and I believe the acquisition will open up a window of opportunity in this sector,” a company spokesman said requesting anonymity.  

Sri Lanka’s property development and the real estate sector is currently dominated by Prime Lands (Pvt.) Limited, Home Lands Holding and the emerging player Blue Mountain (Pvt.) Limited.  

The acquisition is most likely to go through in no more than 45 days upon receiving the shareholder approval.

The company will call for an Extraordinary General Meeting soon to obtain its shareholder approval.

The acquisition could also be considered as a part of its group re-strategizing exercise, which started end-July with the appointment of the management consultancy firm, MTI Consulting led by Hilmy Cader.

However, the company is still in negotiation with Wincon and is deliberating how to merge the entity with the group.

MTD Walkers is believed to be the country’s only infrastructure developer which is able to perform the entire spectrum of infrastructure development activities through its six subsidiaries, specialized in civil, mechanical and electrical engineering work, pile construction and power generation.  Last week, MTD Walkers’ subsidiary CML-MTD Construction Limited set up another entity as a Board of Investment venture to undertake housing projects under the Urban Regeneration Plan set out as per the model proposed by the Urban Development Authority.

Once the deal goes through, Wincon will become the group’s seventh fully-owned subsidiary.  Meanwhile, it was also learnt that Wincon, which was incorporated in 2003, was looking for an exit from the Sri Lankan market as they were not performing well enough to justify the Sri Lankan existence.

Wincon engaged in property development, building construction and mechanical and electrical engineering work. During the recent quarter ended June 30, 2014, the MTD Walkers group increased its net profits by a massive 74 percent to Rs.281.6 million from the same quarter last year.

MTD Walkers is a heritage firm, being the seventh oldest company in Sri Lanka and has been in operation since 1854.