Reject offer for OSK Ventures International shares: Affin IB

PETALING JAYA (Jan 30, 2014): The unconditional mandatory takeover offer by OSK Equity Holdings Sdn Bhd (OSKE) and Tan Sri Ong Leong Huat to acquire the remaining shares in ACE Market-listed OSK Ventures International Bhd (OSKVI) is not fair and not reasonable, said its independent adviser Affin Investment Bank Bhd (Affin IB).
"We are of the view that the share offer is not fair, taking into account that the share offer price of 58 sen is lower than our estimated range of valuation of the OSKVI shares of 93 sen to RM1.06," it said in an independent advice circular yesterday.
The stock closed at 57.5 sen yesterday with 643,200 shares traded.
Affin IB said the share offer is not reasonable considering OSKE's intention to maintain the listing status of OSKVI unless sufficient valid acceptances are obtained to invoke compulsory acquisition under Section 222 of the Capital Market Services Act.
"By maintaining the listing status of OSKVI on Bursa Securities, holders of the offer shares can continue to trade in their OSKVI shares and are able to liquidate their investments in the open market, notwithstanding that the trading liquidity of the OSKVI shares may be constrained due to OSKE accumulating a higher shareholding level as a result of acceptances pursuant to the offer."
"OSKE has stated its intention to explore various options or proposals to rectify any shortfall in OSKVI's public shareholding spread in the event OSKVI fails to comply with the public shareholding spread requirements under the listing requirements," Affin IB said.
It added that the substantial rise in OSKVI's share price since September 2013 has decreased the premiums offered by the share offer price over the last transacted price, 5-day and 1-month volume weighted average market price (VWAMP).
"Hence the share offer price is not attractive when compared with the average premiums paid for in precedent MGO for the corresponding VWAMP periods," it said. Affin IB noted the positive prospects of the OSKVI group, taking into consideration the positive outlook of the market performance of Bursa Securities and the Malaysian ICT industry where a majority of the investee companies of the OSKVI group are operating in.
It noted the potential improvement in the financial performance of the OSKVI group's major investee companies which may enhance the future value of OSKVI shares and the stronger financial and net cash position of the OSKVI group allowing it to identify and make strategic investments in viable opportunities.
"Based on the above and our evaluation as a whole, we are of the view that the share offer is not fair and not reasonable. Accordingly, we advise and recommend the holders of the offer shares to reject the share offer," it said.