Towerpack's offer to acquire Alcom's shares unfair and unreasonable - Mercury Securities

KUALA LUMPUR: The offer to acquire Aluminium Company of Malaysia Bhd (Alcom) shares by Towerpack Sdn Bhd’s controlling shareholder Yeoh Jin Hoe and persons acting in concert with him at 61 sen per RM1 share is deemed unfair and unreasonable, according to independent adviser Mercury Securities.

In a filing with Bursa Malaysia,  Alcom in an independent advice circular advised its non-interested directors and holders of the offer shares to reject the offer based on the recommendations by its independent adviser.

In evaluating the fairness of the offer, Mercury Securities has adopted the revalued net asset value (RNAV) methodology for the purpose of appraising the valuation of Alcom shares.

Based on the methodology, the RNAV of the entire interest in Alcom is about RM259.38mil which transalates into an RNAV per Alcom share (excluding 2,079 million treasury shares as at October 10) of RM1.96.

Therefore, the offer price of 61 sen is lower than the RNAV per Alcom share, representing a discount of 68.88%. Among others, the offer price has been lower than the closing market prices of the company’s shares for about 80% of the total market days over the last five years up to September 14 (being the last full trading day prior to the serving of the notice). 

In assessing the reasonableness  of the offer, the independent adviser had considered the pertinent factors like the offeror’s intention to maintain the listing status of Alcom on the main market of Bursa Securities.

The offeror also does not intend to invoke the provisions of section 222(1) of Capital Markets and Services Act 2007 to cumpulsorily acquire any outstanding offer shares for which valid acceptances have not been received prior to the closing date. 

Accordingly, it added that the company’s shares would remain tradable on the main market and hence, the holders would still have the opportunity to realise their investments in the open market after the closing date. 

The offer would remain open for acceptance until 5pm on October 27. Prominent corporate figure Yeoh’s move to acquire Alcom is seen by analysts as a move to strengthen his business interest in the aluminium packaging industry. 

He owns 99% of Towerpack, while his sons – Marc Francis Yeoh Min Chang and Keith Christopher Yeoh Min Kit – own the remaining 0.5% stake each in the investment vehicle.

In its latest results for the financial year ended March 31, 2016 (FY16), Alcom reported an improved net profit of RM2.57mil on the back of RM287.41mil in revenue. In comparison, for FY15, the company reported a net loss of RM1.64mil on a revenue of RM279.71mil.