Takeover offer for SRC deemed ‘not fair’

PETALING JAYA: The unconditional takeover offer by Malaysia Hengyuan International Limited (MHIL) for the remaining shares of Shell Refining Company (Federation of Malaya) Bhd (SRC) has been deemed “not fair” and “not reasonable” by independent adviser AmInvestment Bank Bhd.
The firm has asked shareholders to reject the offer.
AmInvestment in its independent advice circular yesterday, said the offer price of RM1.92 per offer share, is not fair as it represents a discount of at least 53.8% over the range of fair value per SRC share, and a discount of at least 61.13% over the closing market price.
“Over the entire period under review, the SRC shares have traded above the offer price of RM1.92 per offer share, with historical daily closing market price ranging from RM2 (Dec 22, 2016) to RM6.03 (Jan 12, 2016).”
Explaining its not reasonable stance, AmInvestment Bank said it is premised on MHIL’s intention to carry out the required upgrades to the refinery plant to meet the Euro 4M and Euro 5 fuel standards specification requirements and which would allow SRC’s refinery plant to remain viable and continue as a going concern.
MHIL also intends to strengthen SRC’s position as a regional refined product supplier which would be in the best interest of the shareholders of SRC.
The parent of MHIL, Shandong Hengyuan Petrochemical Company Limited also has the experience in operating a refinery plant as part of its larger petrochemical operations and is familiar with production technologies as well as know-how of producing and selling Euro 4 and Euro 5 fuels, which in turn can be transferred to SRC.