Change of heart over Aspire Insight deal

PETALING JAYA: Datuk Anthony See Teow Guan, the only remaining member of the See family on the board of Kian Joo Can Factory Bhd, has come out to oppose Aspire Insight Sdn Bhd's RM1.5 billion management buyout, three days after warning that he would take matters to court to block the deal.
In a Bursa Malaysia announcement yesterday, Kian Joo said Teow Guan's, who is also the company's executive director and substantial shareholder, change of heart is because of the letter of intent received from Toyota Tsusho Corp (TTC) to buy 51% of Kian Joo for RM3.74 a share.
"Kian Joo wishes to announce that Teow Guan has declared that he is now against the proposed disposal (to Aspire Insight)," Kian Joo said.
"Teow Guan's reason for the change of decision is in light of the letter of interest that was received from TTC," it added. Teow Guan did not return calls for comment.
Teow Guan was ousted as the managing director of Box-Pak Malaysia Bhd at a polling during its AGM three days ago. Kian Joo, represented by its managing director Yeoh Jin Hoe, with a 54.83% stake in corrugated carton boxes manufacturer Box-Pak, voted against Teow Guan's re-election as Box-Pak director.
Teow Guan's objection on the Aspire Insight deal is not entirely unexpected, as he was earlier quoted as saying he will jeopardize the deal if Yeoh "pushes him too far".
Despite Teow Guan's declaration however, Kian Joo group CFO Ooi Teik Huat told SunBiz that plans to table Aspire Insight's offer for the can and packaging products maker will proceed according to plan.
"Yes, the EGM will still go on and we will ask our shareholders to decide on the matter," Ooi confirmed on the phone.
Kian Joo is to hold an EGM, tentatively on May 23, for the shareholders to decide on the management buyout launched by Aspire Insight.
The deal would provide an opportunity for Yeoh, who is the major shareholder of Can-One Bhd, to cash out from Kian Joo, some two years after Can-One acquired a 32.9% stake in Kian Joo for RM1.65 per share or RM241.1 million.
All but one of Kian Joo's board of directors, including Teow Guan, had agreed to table the offer from Aspire Insight to shareholders. See Teow Koon, Teow Guan's brother, had dissented. No reason was given for the dissent. Teow Koon however did not get re-elected as a board member of Kian Joo at an AGM two days ago.
According to Ooi, the independent adviser Kenanga Investment Bank Bhd is yet to come out with the independent advice circular. Teow Guan's and Teow Koon's views on Aspire Insight's bid are expected to be included in the circular, which will be dispatched to the shareholders 21 days before the EGM.
For the Aspire Insight deal to go through, 75% in value of non-interested shareholders present at the upcoming EGM would have to vote for the deal.
However, unlike the selective capital reduction and voluntary de-listing exercise, the disposal of assets does not include a condition that the value of votes cast against the deal is, not more than 10% of total disinterested shares.
In other words, the See family needs more than 25% of total disinterested shares' support, to block the Aspire Insight deal.
Ng, an industry observer familiar with the relevant processes undertaken in merger and acquisition exercises, told SunBiz that Teow Guan's latest move to declare that he has changed his mind and now objects Aspire Insight's bid, is to gain support from the minority shareholders.
"This is a high-profile declaration. Teow Guan is now trying to gain sympathy, after realizing that Yeoh, a partner that he chose two years ago, has now turned against him," said Ng.
A quick check on Kian Joo's annual report 2013 showed that the See family collectively owns at least 7.78% stake in Kian Joo.
Commenting on the independent advice circular, Ng said the directors' opinion on the disposal must be included. However, the independent adviser will not take into consideration Teow Guan's and Teow Koon's views.
"They assess the value independently. Normally, it is the independent directors who rely more on the independent adviser, who will have their own opinions based on their research within two weeks," Ng explained.