Wing Tai takeover offer 'not fair but reasonable', says independent adviser

KUALA LUMPUR (June 23): The takeover offer for Wing Tai Malaysia Bhd at RM1.80 per share is "not fair but reasonable", says independent adviser Mercury Securities Sdn Bhd.

"Accordingly, we recommend the holders to accept the offer," it said in a circular to the minority shareholders of the property development company.

Mercury Securities said the offer is unfair because the offer price represents a discount of 49.3% to 49.86%, or RM1.75 to RM1.79, from its estimated fair value range.

"Based on the sum-of-parts valuation (SOPV) model, Mercury Securities has derived a range of estimated fair value of RM3.55 to RM3.59 per Wing Tai Malaysia share," it said.

However, the offer is deemed reasonable as the offer price is higher than the daily volume-weighted average market price (VWAMP) of Wing Tai shares for 99% of the total market days over the past one year up to the last practical date, Mercury Securities said.

The offer price represents a premium of 61.75% to the average daily VWAMP over the past one year and 36.36% to the average daily VWAMP over a three-year period, it said.

The adviser also considered the illiquidity of Wing Tai shares as a factor in its recommendation.

Wing Tai, whose business activities also include apparel retailing and garment manufacturing, received the takeover offer on May 23 from its controlling shareholders, Wing Tai Holdings Ltd and its subsidiary, Wing Tai Investment & Development Pte Ltd. Both companies are owned by the Cheng family of Singapore.

The takeover parties, which hold a collective 66.13% stake in Wing Tai, have said they do not intend to maintain the listing status of the company.

At 3.30pm, Wing Tai's share price is unchanged at RM1.80, giving it a market capitalisation of RM877.19 million. — theedgemarkets.com

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