Malaysian infrastructure group MMC Corp today announced the nation's biggest-ever takeover with plans to acquire power producer Malakoff for RM9.3 billion (US$2.58 billion).

The deal eclipses the RM6.7 billion purchase of Southern Bank by Bumiputra-Commerce Holdings earlier this year which had ranked as the country's largest corporate deal.

MMC currently owns 22 percent of Malakoff, the nation's biggest independent power producer.

It said in a statement that the proposed takeover will be completed through its wholly owned subsidiary Nucleus Avenue Sdn Bhd.

"Upon completion of the acquisition, MMC intends to invite other investors into Nucleus Avenue, with the aim of eventually retaining more than 50 percent," it said.

Newspaper reports have said that MMC will team up with the state-owned pension vehicle Employees Provident Fund (EPF) to carry out the deal in a 70-30 split.

Receptive to offer

The New Straits Times said that British International Power, which holds 18.06 percent of Malakoff, is receptive to the offer by MMC which is controlled by tycoon Syed Mokhtar Al-Bukhary.

"When Malakoff completes its Tanjung Bin power plant, its profit level will be around RM1.0 billion annually. The deal will basically fund itself," a source close to Syed Mokhtar told the daily this week.

The Tanjung Bin plant will supply up to 24 percent of peninsular Malaysia's power-generation capacity when it is fully operational next year.

The New Straits Times said that in addition to the power production business, MMC will acquire port and logistics arms in southern Johor state which has been targeted for major infrastructure projects.

MMC's group chief executive Feizal Ali said the takeover is in line with the firm's strategy to focus on three core businesses - transport and logistics, energy and utilities and engineering and construction.

"The majority of the borrowings are project finance-based at the level of the operating subsidiaries, which generate a steady stream of cash flows and are self-sustaining," he said in the statement.

The company said that the deal is expected to be completed by the first quarter of 2007, subject to government and regulatory approval.