Yi-Lai shareholders advised to reject takeover offer

PETALING JAYA: Independent adviser Mercury Securities Sdn Bhd deems the take over offer for Yi-Lai Bhd as "not fair" and "not reasonable", hence its shareholders are advised to reject the offer.

In an independent circular filed with the stock exchange, the ceramic tile manufacturer said non-interested directors Datuk Wong Gian Kui, Hsieh Yu-Tien and Anita Chew Cheng Im concurred with the evaluation and recommendation of Mercury Securities.

The offer will remain open for acceptances until 5pm on Nov 16.

Mercury Securities said the offer price of 78.5 sen is not fair as it is lower than and represents a discount of 61.5 sen to 74.5 sen or 43.93% to 48.69% over the estimated fair value of RM1.40 to RM1.53.

Meanwhile, the offer is considered not reasonable as the offer price is lower than its trading market prices and its shares are iliquid, with a simple average monthly trading volume-to-free float for the past 12 months up to September 2017 of 1.23%.

Last month, Yi-Lai received a conditional mandatory takeover offer from Boundless Vigour Sdn Bhd, which is owned by two directors in the company, to acquire the remaining shares it does not own for 78.5 sen per share.

Boundless Vigour, together with its parent company Hampton Capital own a 33.01% stake in Yi-Lai, triggering the mandatory general offer threshold of 33%, after Boundless Vigour's acquisitions of an additional 0.39% stake in Yi-Lai for between 75 sen and 78.5 sen per share.

Yi Lai's directors Aaron Tan Jian Hong and Wendy Kang Hui Lin are the ultimate offerors for the offer.

Both Boundless Vigour and Hampton Capital are wholly owned subsidiaries of Capital Global Ventures Ltd.

Yi Lai's listing status is dependent on the acceptance percentage, whereby the group will be delisted if the offerors manage to hold at least 75% stake after the offer.

Yi-Lai shares rose half a sen or 0.6% to close at 79.5 sen today, with some 689,800 shares changing hands.