2nd UPDATE: Malaysian Firms Set To Acquire London Landmark Battersea for GBP400 Million

--Malaysia's SP Setia, Sime Darby set to acquire Battersea for GBP400 million

--SP Setia, Sime Darby have 28 days to conduct due diligence, negotiate contract

--To build new station for Underground's Tube network that will pass by Battersea

(Recasts lead and adds reason for Sime Darby and SP Setia's bid in the second paragraph.)

 
   By Jason Ng 
 

KUALA LUMPUR--Malaysia's largest listed palm oil producer Sime Darby Bhd (4197.KU) and largest property firm SP Setia Bhd (8664.KU) are teaming up to acquire Battersea Power Station, one of London's most iconic landmarks, for GBP400 million (US$620 million) as cash-rish Malaysian firms look to expand overseas.

Buying the Battersea project would be Sime Darby's first foray overseas and dovetails the company's plans to expand its property development arm beyond developing townships in Malaysia. It will also mark SP Setia's first step into Europe after venturing into Vietnam, Australia and Singapore.

Sime Darby and SP Setia were jointly named the preferred bidder for site of the decommission power station and have signed an exclusive agreement with administrator Ernst & Young LLP, according to a joint statement by the companies Thursday.

Battersea Power Station, which was built in the 1930s, was closed in 1983. While it became a famous landmark after being featured on Pink Floyd album covers for its distinctive chimneys, the site has become synonymous with difficult and ultimately abandoned property redevelopment schemes. The site, loved by many Londoners, has been the focus of numerous attempts by various developers to revive its prospects.

SP Setia and Sime Darby--both cash-rich companies backed by state-linked funds--said they are planning for a "multi-use real estate regeneration project" and have committed to the construction of a new station to be part of London Underground's transit network that will pass by the site.

The two companies will also preserve the facade of the historical power plant with its iconic chimney stacks, they said.

"This is viewed as fundamental to the success of this regeneration project," they said, adding that they have up to 28 days to conduct further due diligence and negotiate a contract.

Prior to Sime Darby and SP Setia's involvement, Irish property firm developer Real Estate Opportunities PLC (REO.LN) was forced to hand over the site of the power station to Ireland's National Asset Management Agency and Lloyds Banking Group PLC (LYG), senior creditors of the company.

In December, creditors put the company in administration, which triggered a sales process run by Ernst & Young and real estate agents Knight Frank. NAMA and Lloyds are owed GBP334 million in aggregate, while junior debt accounts for another GBP168 million.

The Malaysian group was going up against another consortium headed by veteran British property investor Godfrey Bradman, who is backed by the billionaire real-estate investors the Reuben Brothers, to buy the site out of administration, people familiar with the matter said earlier.

It is unclear whether Chelsea Football Club PLC, owned by billionaire Russian oligarch Roman Abramovich, tabled a bid in time for the deadline. Press reports have suggested the club's owner tabled an offer significantly lower than other competitive bids.

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