KUALA LUMPUR: Hextar Rubber Sdn Bhd and Datuk Ong Choo Meng, who offered RM1.80 per share in their takeover of Rubberex Corp (M) Bhd, explained that there was concern among them and the sellers about the surge in the glove maker's share price.
In the circular to Rubberex shareholders on Monday, Hextar Rubber and Ong – the joint offerors -- said the rapid increase in the price of small-cap glove maker Rubberex shares in reaction to the Covid-19 pandemic, “may not be sustainable in the long run”.
“Further, certain stockbrokers had also imposed share margin caps on the trading of glove counters including Rubberex on June 2,2020 as a result of these concerns, ” the joint offerors said.
To recap, Rubberex had on June 23, received an unconditional mandatory takeover offer to acquire all the remaining ordinary shares from the joint offerors who had acquired 57.24 million ordinary shares, or a 20.63% stake, the previous day from Seng Sheng Enterprise Sdn Bhd which owns 8.87%, Datuk Seri Chiau Beng Teik (8.16%) and Peh Lian Hwa (3.60%).
Prior to the acquisition, the joint offerors had held a 29.55% equity interest in Rubberex.
Following the acquisitions, their collective equity interest in Rubberex increased from 81.96 million shares to 139.21 million shares, or about 50.18%.
In Monday’s circular to shareholders, the joint offerors said the transaction price of RM1.80 was arrived at so that the vendors who were holding a substantial block of Rubberex shares to liquidate their portion without affecting the market price.
“If the vendors were to dispose such large number of shares in the open market, the share price may be negatively affected and the vendors may not be able to realise their investment at the prevailing market price or the transaction price of RM1.80 per Share.
“The closing price of Rubberex shares of RM2.13 per share during the commencement of discussion between the joint offerors and vendors for the acquisitions, ” they said.
However, all parties agreed to the transaction price of RM1.80 per share on June 11, despite the substantial increase in price since May 12 on concerns that the rapid increase in the price of Rubberex shares in reaction to the Covid-19 pandemic, may not be sustainable in the long run, they said.
It rose to a high of RM4.54 on June 1, tracking the surge in the share prices of glove makers following the Covid-19 pandemic.
As the joint offerors mentioned in the circular, some brokerages had imposed share margin caps on the trading of glove counters including Rubberex on June 2, when the share price closed at RM3.80 on that day.
They finalised the transaction price for the acquisitions at RM1.80 on June 11 when the share price closed at RM3.03.
The offer will remain open for acceptances until 5pm on Aug 4 being the first closing date.
At 3.11pm, Rubberex was down 17 sen to RM3.37.
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