D-day for Can-One shareholders at EGM

MIDF Research is negative on Can-One's mandatory general offer (MGO) for Kian Joo Can Factory Bhd (KJCF) as the price will be too steep and impact its gearing.

PETALING JAYA: An EGM today will see shareholders of Can-One Bhd decide on whether to pursue the planned takeover of its associate company, Kian Joo Can Factory Bhd.

Shareholders will gather for the meeting, to be held at 10am at the Tropicana Golf and Country Resort Club, to vote on the proposed acquisition of a 0.49% equity interest in Kian Joo, and the resulting mandatory general offer for the remaining shares in the company.

If shareholders back the proposal, it will represent yet another attempt by Can-One to take over Kian Joo, despite previous failed attempts.

It is up to Kian Joo to decide on whether to accept or reject the offer.

In the deal announced last December, Can-One is proposing to acquire 2.167 million shares or a 0.49% interest in Kian Joo from Tan Kim Seng for RM6.71mil or RM3.10 per share in cash.

The move, if it goes through, will increase Can-One’s stake to 33.39% from 32.90%, thus triggering an MGO for all the remaining shares in Kian Joo that it does not already own.

The history between Can-One and Kian Joo began a decade ago in 2009, when Can-One entered a deal to acquire a 32.9% controlling stake for RM1.65 a share, or RM241.1mil cash.

Due to attempts to block the transaction by a faction of Kian Joo’s founding family, the deal was only completed three years later in 2012.

A year later, Kian Joo received a proposal from a party viewed as connected to Can-One – Aspire Insight Sdn Bhd.

The company made a RM1.46bil cash takeover offer to buy Kian Joo’s entire assets and liabilities at RM3.30 a share.

This led to another legal battle, which was later struck out by the Kuala Lumpur High Court.

However, the deal did not go through.

In the circular to its shareholders on the latest proposal, Can-One said the proposed takeover of Kian Joo would create “enhanced scale and synergies” for the enlarged group through streamlined procurement from suppliers to negotiate bulk discounts, and improved operational efficiencies, among others.

The move, it said, would also allow the group to increase its range of products and “gain better access to both debt and equity capital markets” to fund business activities and expansion.

However, the move to take over Kian Joo will push its gearing ratio up from 0.63 times as at Dec 31, 2017 to 2.45 times.

In the circular, the group revealed that RM923.91mil in bank borrowings may be required for the transaction.

Ahead of the meeting, shares of Can-One closed three sen lower at RM2.58, while Kian Joo closed unchanged at RM2.87.

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Business , Can-One , Kian Joo , takeover , EGM , equity , general offer ,


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