Tecnic minority shareholders urged to reject offer

PETALING JAYA: Tecnic Group Bhd’s minority shareholders have been told by its board of directors and independent adviser Mercury Securities Sdn Bhd to reject a takeover offer at 63 sen a share.
In its independent advice letter in relation to the unconditional mandatory takeover offer by Rohas-Euco Holdings Sdn Bhd (RE Holdings), Tan Sri Nik Awang @Wan Azmi Wan Hamzah, Puan Sri Nik Anida Nik Manshor, Sia Bun Chun and Chan Liew Hoon (joint offerors), Mercury Securities said the offer is “not fair” and “not reasonable”.
It said that the offer price is lower than the closing market prices of the Tecnic shares for about 95% of the total market days since the announcement of the non-binding memorandum of understanding (MoU) between Tecnic and RE Holdings on Sept 21, 2015 up to the latest practicable date of Feb 6, 2017.
It also represents a discount of 7 sen (10%) to 13 sen (17.11%) to the value of the offer shares, that is, the range of fair values per Tecnic share derived using the discounted cash flow valuation method of 70 sen to 76 sen.
Mercury Securities considers the offer “not reasonable” based on the joint offerors’ intention to maintain the listing status of Tecnic and to not invoke the provisions of Section 222(1) of the CMSA.
Based on the offer documaent, Tecnic will undertake the proposed offering in order to comply with the public spread requirement upon completion of the acquisition.
This will allow the Tecnic shares to remain tradeable.
“Moreover, upon completion of the acquisition, the enlarged Tecnic Group will be involved in new core businesses including the fabrication of steel towers for power transmission and telecommunications, thereby allowing the holders the opportunity to participate in the growth prospects of these businesses.”
The offer closes at 5pm on Feb 23, 2017.