Unisem board, independent adviser tell minorities to reject takeover offer

CIMB Research still expects Unisem to record stronger earnings delivery in 2H18F, driven by its 8-inch wafer capacity expansion in Ipoh,

KUALA LUMPUR: The board of Unisem (M) Bhd has advised the minority shareholders of the semiconductor company to reject the takeover offer led by the founders and some China-based buyers.

The board concurred with independent adviser Public Investment Bank’s evaluation and recommendation that the offer is “Not Fair”  and “Not Reasonable” and recommends the minority shareholders to reject the offer.

The consideration for the offer is RM3.30 for each offer share would be satisfied in cash.

To recap, in September 2018, Unisem announced that founders John Chia, his son Alexander Chia, Jayvest Holdings and SCQ Industries had offered to take over the company with some China-based partners for RM1.82bil.

The Malaysian parties, who collectively have a 24.28% stake in Unisem, partnered with China’s Tianshui Huatian Technology Co, Ltd (TSHT) and Tianshui Huatian Electronics Group Co, Ltd (TH Group Co) to launch a takeover of the rest of Unisem’s 550.565 million shares.

The offer, once approved, will eventually see Unisem having the China companies as its biggest shareholder, eclipsing the Malaysian parties’ stake.

In the independent advice circular issued on Monday the board  concurred with Public Investment Bank, based on the enterprise value/ earnings before interest, tax, depreciation and amortisation (EV/Ebitda) multiple valuation method, the ascribed equity value of Unisem shares ranges from RM4.31 to RM5.38. 

“The offer price of RM3.30 per offer share is below the range of the ascribed equity value per Unisem share which represents a discount of RM1.01 to RM2.08 or 23.43% to 38.66% to the ascribed equity value per Unisem share,” the executive summary said.

Although the offer price represents a premium in the historical share price analysis, it is below the range of the ascribed equity value per Unisem Share. 

“Premised on the overall assessment of the offer price as set out in Section 6, Part B of this IAC, we are of the opinion that the offer is not fair,” they said.

As the joint offerors intend to maintain Unisem’s listing status the shares will remain traded on Bursa Securities and the holders will still be able to trade in the shares after the closing date.

At 11am, Unisem was down one sen to RM3.21.