Pimpian Ehsan minorities advised to reject RM1.07 offer

KUALA LUMPUR: Independent adviser TA Securities and the independent directors of Pimpian Ehsan Bhd (PEB) have advised the minority shareholders to reject the takeover offer of RM1.07 a share.

In the independent advice circular on Monday, the independent directors concurred with TA Securities that the offer was unfair and advised them to reject the offer by Pitahaya (M) Sdn Bhd.

On Feb 19, Pitahaya acquired 45.28 million shares or 65% in PEB for RM48.46mil or RM1.07 a share via direct business transactions and it extended an unconditional mandatory take-over offer to acquire all the other shares.

The offer will remain open for acceptances until 5pm on April 2. At 4.28pm, PEB was down seven sen to RM1.40.

TA Securities said based on the asset-based valuation approach, the offer price is higher than and represents a premium of approximately 4.90% over the unaudited net asset per share as at Dec 31,2020 of RM1.02.

The offer price is seven sen over the PEB’s traded market price on the last trading day (LTD) prior to the serving of the notice on Feb 18 and a premium of between 7.81 sen and 11.15 sen over the five-day, one-month, three-month, six-month and one-year VWAPs of PEB shares up to the LTD.

“The offer price represents a discount of 57 sen (34.76%) and 59.7 sen (35.82%) over the last traded market price of PEB shares on March 15, the latest practicable date (LPD) and the five-day VWAP of PEB shares up to the LPD respectively, ” it said.

TA Securities added the offer is not fair in view that although the offer price is higher than the estimated value and market prices of PEB shares up to the LTD, the offer price is lower than the market prices of PEB shares after the LTD and up to the LPD.

It also said the offer is not reasonable as PEB shares will remain tradable and hence, the holders will still have the opportunity to realise their investment in PEB shares at the prevailing market prices in the open market after the closing date.

However, its caveat was that there was no assurance PEB shares will continue to trade at the current price levels and trading volume after the closing date.

“Holders of the offer shares should note that the market prices of PEB shares have been trading above the offer price since notice up to the LPD.

“TA Securities is of the view that the historical market prices of PEB shares after notice up to the LPD would serve a more meaningful reference of the market prices of PEB shares to be used as part of its evaluation of the offer as it is reflective of the current value of PEB shares.

“Premised on the above and the evaluation of the offer by TA Securities, TA Securities is of the view that the offer is not fair and not reasonable. Accordingly, TA Securities recommends that you reject the offer.

The independent directors comprising Shamshiah Hashim @ Abu Bakar; Ibrahim Topaiwah; Jumsi Batri; and Mohammad Emir Taufiq Ahmad @ Ahmad Mustapha said they concurred with the evaluation, views and recommendation of TA Securities that the offer is not fair and not reasonable.

“Accordingly, the non-interested directors recommend that you reject the offer, ” it said.