E&O takeover offer at 3% premium deemed fair

Analysts said the takeover would provide long-term value of E&O’s landbank, especially with the developer’s newly-reclaimed Seri Tanjung Pinang 2, Penang (STP2A). (File pic shows the master-planned seafront township of Seri Tanjung Pinang. - Provided Pix / 04 Feb 2021)

PETALING JAYA: The takeover offer of property developer Eastern & Oriental Bhd (E&O) by one of its directors at a 3% premium is deemed to be a fair deal.

Analysts said the takeover would provide long-term value of E&O’s landbank, especially with the developer’s newly-reclaimed Seri Tanjung Pinang 2, Penang (STP2A).

CGS-CIMB said the offer, which had triggered a conditional mandatory general offer (CMGO), was deemed as fair, as it translated into a 0.5 times 2021 price-to-book value that was on par with its peer average.

“The CMGO offer is conditional upon the offeror having received sufficient acceptance to the offer, which would allow the offeror, joint ultimate offerors and persons acting in concert to control more than 50% of the voting shares in E&O. Failing which, the offer shall lapse and all acceptances shall be returned to the accepting holders.”

PublicInvest Research said it is maintaining a “neutral” call on E&O, due to the lack of re-rating catalysts but with an increased fair value of 60 sen.

The research house expected E&O to “recover slowly” in 2022.

In a filing with the stock exchange last Friday, E&O announced that one of its directors, Datuk Tee Eng Hong, had made a CMGO to buy out minority shareholders in the company for 60 sen a share.

This was after Tee, through his private investment vehicle Amazing Parade Sdn Bhd, acquired an additional 10.89% stake in the company from Sime Darby Bhd for RM93.5mil or 60 sen a share.

The purchase raised Amazing Parade’s equity interest in E&O to 31.82%. Together with other parties acting in concert, the offeror’s stake in E&O has increased to 42.71%, triggering a conditional mandatory takeover offer.Tee is the executive chairman of construction firm Kerjaya Prospek Group Bhd.

E&O said Amazing Parade intends to maintain the listing status of the developer.

In a separate filing, Sime Darby said the disposal is in-line with its on-going non-core asset rationalisation exercise.

Sime Darby acquired a 30% stake in E&O in 2011 from E&O managing director Datuk Seri Terry Tham and several shareholders for RM766mil at RM2.30 per share.

It subsequently pared down its stake by disposing off 110 million E&O shares (10%) for RM2.90 per share in 2014 and another 126 million shares (10% stake) in 2016 for RM2.60 per share. E&O registered property sales of RM45.2mil for its third quarter ended Dec 31,2020, bringing new sales to RM193.2mil.

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