Reject offer as Rubberex shares more valuable than RM1.80 offer

KUALA LUMPUR: Glove manufacturer Rubberex Corp (M) Bhd, whose share price had run up in line with the other glove makers due to the Covid-19 pandemic, saw minority shareholders being told to reject the takeover offer of RM1.80 per share

The independent adviser, MainStreet Advisers Sdn Bhd and Rubberex's non-interested directors had in the independent advice circular (IAC) concurred the offer price was a discount to the estimate value of the share and also the volume weighted average price (VWAP) while the shares were easily tradeable on Bursa Malaysia and hence, the offer was unreasonable.

In the IAC, they said the offer was not fair and not reasonable.

According to MainStreet, based on the discounted cashflow (DCF) valuation, the estimated equity value of Rubberex was between RM613.21mil and RM642.24mil.

“The offer price represents a discount of 41 sen to 52 sen or 18.55% to 22.41% to the estimated value per Rubberex share of between RM2.21 and RM2.32, ” it said.

It aso said the offer price was at a discount ranging from 14 sen (7.22%) to RM1.25 (40.98%) to the five-day, one-month, three-month, six-month and one-year VWAPs of the Rubberex shares up to June 19, being the last trading day before the date of the notice of the unconditional mandatory take-over offer.

MainStreet said it also represented a discount of RM1.87 (50.95%), RM1.08 (37.50%) and RM1.77 (49.58%) to the five-day VWAP of the Rubberex shares up to July 17, being the latest practicable date (LPD) before the posting date of the independent advice circular.

To recap, Rubberex had on June 23, received an unconditional mandatory takeover offer to acquire all the remaining ordinary shares from the joint offerors – Hextar Rubber Sdn Bhd and Datuk Ong Choo Meng.

They had acquired 57.24 million ordinary shares, or a 20.63% stake, 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%, hence triggering the unconditional mandatory takeover offer for the remaining 138.20 million shares or 49.82% stake.

In Thursday's IAC, MainStreet also said the joint offerors would maintain the listing status and as such, the shares will remain traded on Bursa Securities and the holders would still be able to trade in the shares even on the closing date on Aug 4.

It added Rubberex shares were relatively liquid and the holders could dispose of their shares in the open market during the offer period and subsequent to the closing date at a price higher than the offer price, net of transaction cost.

“In view of the above, we are of the opinion that the offer is not fair, ” MainStreet said.

At midday, Rubberex was up four sen to RM3.59.