Yee Lee offer deemed 'not fair' but 'reasonable'

Major shareholders offer RM185m to take edible oil trader Yee Lee Corp private

KUALA LUMPUR: Yee Lee Corp Bhd’s proposed privatisation is deemed “not fair”, but “reasonable”, according to independent adviser Affin Hwang Investment Bank Bhd.

The major shareholders of Yee Lee, which own a  combined 58.41% stake, have launched a voluntary takeover to acquire the remaining shares at RM2.33 per share.

“We are of the view that the offer is ‘not fair’ as notwithstanding that the offer price represents a premium to the historical market prices of Yee Lee Shares over the past 12 months up to and including the April 25, the offer price represents a discount of 31.87% to 40.71% to the estimated fair value of Yee Lee Shares of between RM3.42 and RM3.93,” Affin Hwang said in a circular posted to the stock exchange. 

The independent adviser, however, said the offer was reasonable, given that Yee Lee shares have been thinly traded over the past 12 months up to March 2019, with an average monthly trading volume of 0.89% of total shares.

In addition, Langit Makmur, which is one of the offerors, has been actively acquiring Yee Lee Shares from the open market whereby its shareholding in Yee Lee has increased from nil to 2.56%.  As a result, the joint offerors’ shareholding in Yee Lee has correspondingly increased from 58.41% to 60.96%.

“Hence, in any case, whether the joint offerors receive valid acceptances upon the completion of the Offer or Langit Makmur continues to acquire Yee Lee Shares, the liquidity of Yee Lee Shares is expected to tighten further (due to lower public shareholding spread) and consequentially, holders may find it difficult to dispose of the offer shares in the open market,” Affin said.

“In this regard, the offer presents an opportunity for holders to realise their investment in the Yee Lee Shares on a wholesale basis in cash and at premium to its historical market prices,” it added. 

“Premised on the evaluation of the offer as set out above, we are of the view that the offer is ‘not fair but reasonable’. accordingly, we recommend that the holders accept the offer,” Affin said. 

Last month, Yee Lee has received the voluntary takeover offer from its executive chairman Datuk Lim A Heng @ Lim Kok Cheong, Datin Chua Shok Tim @ Chua Siok Hoon, Lee Ee Young and Langit Makmur Sdn Bhd. Lim is also chairman of Spritzer Bhd.

They are offering to acquire the outstanding 41.59% stake comprising of 79.69 million shares at RM2.33 each or RM185.67mil.

According to Yee Lee, the joint offerors do not intend to maintain the listing status of the company. They will not take any steps to address any shortfall in the public shareholding spread.