KUALA LUMPUR: Mecurity Securities Sdn Bhd has advised the minority shareholders of plantation company Kwantas Corporation Bhd to accept the takeover offer of RM1.65 from the major shareholder.
In its independent advice issued on Friday, it said based on the net asset method, it had derived a fair value of Kwantas group of RM1.11bil or RM3.55 per share.
“The selective capital reduction (SCR) offer price of RM1.65 is lower than and represents a discount of 53.5% to the fair value per Kwantas share, ” it said.
However, Mercury Securities said the proposed SCR was reasonable as it provides an exit opportunity, especially for those holding a significant number of Kwantas shares, to realise their investments.
To recap, Kwantas group CEO and managing director Kwan Ngen Wah had on Aug 26, announced his intention to privatise the company by way of a SCR and repayment exercise.
Kwan and parties acting in concert collectively hold 191.52 million Kwantas shares, representing approximately 61.45%.
Mercury Securities said before the issuance of the takeover offer, the share price had during the six months saw the highest closing price at RM1.44, which was transacted on Sept 2 and the lowest closing price was 46 sen on July 2.
The daily closing market prices of Kwantas shares have never traded above the SCR offer price for the past five years prior to the date of the SCR proposal letter.
The SCR offer price represents a substantial premium of 197.30% over the last traded market price of Kwantas shares and a premium ranging between 181.19% and 220.70% over the five-day, one-month, three-month, six-month and one-year volume weighted average market price (VWAP) of Kwantas shares.
Kwantas recorded net losses for the latest two FYEs June 30,2018 and 2019 of RM93.41mil and RM99.65mil, respectively.
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