PETALING JAYA: Independent adviser Mercury Securities Sdn Bhd has recommended The Store Corp Bhd shareholders to accept the takeover offer price of RM3.70 per share by the offerers, the Tang family, deeming it reasonable but not fair.
Mercury said in a circular to shareholders of the company that the offer, which was lower than the value of the shares, is considered reasonable because it provides an exit opportunity for the shareholders, given the illiquidity of the counter.
For the past year to October, the shares have had an average monthly trading volume to the free float of 0.07%.
“The ‘reasonable’ view outweighs the ‘not fair’ view as the offer price is higher than the trading market prices of The Store’s shares for approximately 99% of the total market days since the group’s listing on March 3, 1994 up to Nov 25, 2016, being the last full trading day prior to the notice.
“Taking into consideration the illiquidity of The Store’s shares, the offer provides an exit opportunity to shareholders to realise their investment in cash, at the offer price,” said Mercury.
It noted that the offer price of RM3.70 was higher than the closing market prices of The Store over the past five years.
The offer price represents a premium of between 16.92% and 27.95% over the five-day, one-month, three-month, six-month and one-year volume weighted average price of the shares.
Besides that, the board of directors has not received any competing take-over offers or offers to acquire the assets and liabilities of the company.
The non-interested directors also do not intend to seek another party to make a take-over offer, in view that the Tang family held a controlling stake of more than a 50% equity interest in The Store as of Dec 27.
Should there be any competing take-over offers, they will not be successful unless the Tang family supports them.
Mercury said the offer was considered not fair due to The Store’s revalued net asset valuation (RNAV).
“Based on the RNAV methodology, the estimated value of the entire equity interest in The Store is RM469.18mil, which translates into RM6.85 per share.
“The offer price is lower than the estimated RNAV per share, representing a 46% discount,” it said.
The Tang family revised its buyout offer to RM3.70 last Friday from the original offer price of RM3.52 when it had triggered the mandatory general offer on Nov 28.
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