Sembcorp Industries disclosed that the US court has denied Cascal’s claim that its proposed tender offer for the NYSE-listed water & wastewater treatment company is in breach of any securities regulation or contractual obligations. This will pave SCI’s offer for the remaining 41.6% of Cascal at US$6.40 (assuming it secures <80%)>80%). This may turn out to be a hollow victory as the stock is trading at a slight premium to its offer price despite its recent price decline to US$6.75.
At any rate, we believe SCI will be happy, having garnered a controlling 58.4% stake in the company. The acquisition will expand SCI;s global footprint by another 8 countries and water capacity by 50% and will be earnings accretive from FY11 onwards.
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