KUALA LUMPUR: YTL Cement Bhd's move to acquire a controlling stake in Concrete Engineering Products Bhd (Cepco) enhances its end-to-end building materials capabilities and exposure to infrastructure growth, analysts said.

Malacca Securities Sdn Bhd head of research Loui Low said Cepco's prestressed spun concrete piles complement YTL Cement's existing cement, ready-mix and aggregates businesses.

This extends its vertical integration into downstream construction products and positions the group well for Malaysia's infrastructure boom.

Low noted that the RM2.60 cash offer represents a meaningful premium to Cepco's recent market price, while its all-cash nature provides certainty.

"However, the mandatory offer was triggered by YTL Cement acquiring a 53.49 per cent block, not a negotiated privatisation, so minorities had no say in setting the price.

"Given Malaysia's current infrastructure cycle, Cepco's earnings outlook could be materially stronger going forward.

"Minorities should weigh the guaranteed cash exit against potential upside, especially since the listing will be maintained, meaning they can stay invested if they choose," he told Business Times.

Low said YTL Cement has moved from zero shareholding to controlling more than 50 per cent of Cepco overnight, bringing a major piling manufacturer under its umbrella.

"Combined with Malayan Cement's integrated cement plants, ready-mixed concrete batching plants, and aggregate quarries, YTL Cement now spans nearly the full building materials supply chain, putting pressure on standalone competitors in both the cement and piling segments," he said.

Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng noted that Cepco specialises in prestressed spun concrete piles, a critical component for heavy-duty foundation works in large-scale infrastructure projects.

He said the acquisition enhances YTL Cement's exposure to upcoming mega infrastructure developments in Malaysia, including the Mass Rapid Transit Line 3 and the Penang light rail transit.

Thong added that the acquisition triggered the mandatory general offer, which is beneficial to shareholders as the offer price represents a 39 per cent premium over the recent share price.

However, he said Cepco's earnings have been inconsistent, fluctuating between profits and losses across several quarters.

He also said the deal could benefit the Malaysian cement sector through industry consolidation, resulting in fewer players and potentially stronger bargaining power for YTL Cement.

Yesterday, Cepco received a takeover offer from YTL Cement, the building materials unit of YTL Corp Bhd, at RM2.60 per share.

According to the notice of offer, YTL Cement is buying a 53.49 per cent stake in Cepco, or about 39.92 million shares, from a group of existing shareholders for roughly RM103.8 million.

Following the acquisition, YTL Cement's direct shareholding in the company will rise from zero to more than half.

As required by Malaysia's takeover rules, YTL Cement will also make a mandatory offer to buy the remaining shares held by minority shareholders.

The offer is entirely in cash at the same price of RM2.60 per share, which is higher than Cepco's recent market price.

CIMB Investment Bank Bhd is managing the offer, which will remain open for at least 21 days after the official offer documents are sent to shareholders.

Those who accept the offer will receive payment by bank transfer or cheque within 10 days.

The offer does not depend on a minimum number of acceptances, as YTL Cement will already control more than 50 per cent of the company.

Cepco's listing on Bursa Malaysia's Main Market will be maintained, and the company will work to meet public shareholding requirements.

Shareholders who choose not to accept the offer may still exercise their legal rights if YTL Cement eventually controls 90 per cent or more of the company's shares.

Cepco shares were suspended on April 1 pending the announcement of the takeover offer.

The company's last traded share was RM1.87, giving it a market capitalisation of RM139.5 million.

YTL Corp's shares closed six sen or 3.66 cent higher at RM1.75, giving it a market capitalisation of RM20.43 billion.