PETALING JAYA: Can-One International Sdn Bhd’s (CISB) mandatory takeover offer to acquire all the remaining shares in Kian Joo Can Factory Bhd it does not already owned at RM3.10 per offer share is deemed “not fair, but reasonable”.
Accordingly, independent adviser UOB Kay Hian Securities (M) Sdn Bhd (UOBKH) has recommended that shareholders accept the offer.
In assessing the reasonableness of the offer, UOBKH said it has taken into consideration the historical market prices and historical trading liquidity analysis of Kian Joo shares; listing status of Kian Joo and that there is no competing take-over offer.
“The offer price of RM3.10 is lower than the estimated fair value per Kian Joo share of RM3.35, representing a discount of 7.46%. Premised on the overall assessment of the offer price, the offer is not fair,“ UOBKH said in its independent advice circular.
However, it said the offer is reasonable as it provides an exit opportunity to shareholders to realise their investment in Kian Joo at the offer price.
“The offer price represents a premium of 52.71% over the last closing market price of the Kian Joo shares as at the last trading day (LTD) and a premium of between 14.81% and 51.22% over the five-day, one-month, three-month, six-month and one-year volume weighted average market price of Kian Joo shares up to and including the LTD.”
As at the last practicable date (LPD), it said the offer price still represents a premium of 1.31% over the last transacted price of RM3.06 per Kian Joo share.
UOBKH added that Kian Joo shares are illiquid, with a simple average monthly trading volume-to-free-float for the past one year up to November 2018 (being the last full trading month prior to the LTD) of 0.33%.
It also said the trading liquidity of Kian Joo shares is significantly lower than the average monthly trading liquidity to free float of the Bursa Malaysia Industrial Production Index of 11.71%.
Nonetheless, shareholders are advised to closely monitor the announcements made by the offeror and market price of the offer shares prior to the closing date before making decision as to whether to accept or reject the offer.
The non-interested directors concurred with the recommendation of UOBKH that the terms of the offer are not fair but reasonable. Accordingly, the non-interested directors recommended that shareholders accept the offer.
CISB, a wholly owned subsidiary of Can-One Bhd, launched the mandatory takeover offer after its shareholdings in Kian Joo increased from 32.90% to 33.39% following the acquisition of a 0.49% stake at RM3.10 per Kian Joo share, which was completed on Feb 14, 2019.