Gamuda has received a third takeover offer for Splash from the Selangor state government. Although the price tag remains the same, the state government clarified that it will honour the two O&M contracts with Gamuda Water and Sg. Harmoni. We believe the offer is fair and should be viewed positively by shareholders of Splash and Gamuda. It translates into a cash return of RM632m (31 sen/share) for Gamuda and will add 3 sen to RNAV. The group's cash will jump 53% to RM1.8bn if the cash is retained and 26% to RM1.5bn if half of the cash is given out as a special dividend of 16 sen.
We maintain our TRADING BUY call on the sector. The third offer for Splash suggests that another better
offer could be in the wings for Puncak Niaga which is a TRADING BUY with an unchanged target of RM3.40.
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