PETALING JAYA: The founding family of Huat Lai Resources Bhd has launched a takeover offer for the remaining shares they do not own in the company for RM5 a share.
The Lim family owns a 74.6% stake in the poultry company and would be forking out RM98.9mil for the remaining shares.
Shares in Huat Lai closed at RM4.80 yesterday, a 4.2% discount to the offer price of the takeover.
The Lim family is also the management and sits on the board of directors of the Malacca-based company.
According to a filing with Bursa Malaysia, Huat Lai managing director Lim Yeow Her and his brother Lim Yeow Kian and Datuk Lim Yeow Siong, who are also the directors of Huat Lai, have launched a conditional takeover offer to acquire the remaining 19.78 million shares in the company for RM5 a share.
It said the Lim family planned to subsequently take the company private.
“In the event that the joint offerers receive valid acceptances, resulting in the joint offerers holding in aggregate 90% or more, an immediate announcement will be made by Huat Lai.
“Upon such an announcement, Bursa Securities shall suspend the trading in Huat Lai,” it said.
Note that Huat Lai has a 69.8% stake in listed poultry player TPC Plus Bhd.
Prior to the takeover announcement, shares in Huat Lai rose 5.5% from Oct 6, giving it a market capitalisation of RM374.3mil.
The counter is lightly traded and tightly held by the Lim family.
Huat Lai said the offer price of RM5 was a premium of 24 sen or 4.98% to the five-day, volume-weighted average price (VWAP) of the shares up to and including Oct 21.
The offer price was also a premium of 8.27%, or 38 sen, to the one-month VWAP of RM4.62 and a premium of 15.6%, or 67 sen, to the six-month VWAP of RM4.33.
At RM4.80 a share, Huat Lai is trading at a historical price-earnings ratio of 19.74 times, according to Bloomberg data.
For the first half of the financial year ending Dec 31, 2016, Huat Lai posted a 37% decline in net profit to RM30.73mil from RM48.99mil in the same period last year.
Revenue for the period, however, was higher at RM787mil from RM720.52mil previously.
The profitability of poultry companies has been a little patchy, influenced by feed costs and market prices of both broilers and eggs.
For 2015, the company posted its strongest revenue of RM1.5bil. Revenue has been on an uptrend since its listing in 2002.
As at June 30, Huat Lai had cash and cash equivalents of RM34.7mil and borrowings of RM480.2mil.
Its integrated poultry operations cover the production of poultry feed, the breeding of day-old chicks, broilers, layering and the downstream processing of chickens.