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Investors may want to stay in Focal Aims

KUALA LUMPUR: Shares in Focal Aims Holdings Bhd, which is being taken over by EcoWorld Development Holdings Sdn Bhd and Liew Tian Xiong at RM1.40 per share, have been chased for the second consecutive day to close above the offer price yesterday.

This indicates that shareholders may not want to part with the company or are expecting the offerors to hike up the price. Yesterday, shares in the property company closed 39 sen or 31.45% higher at RM1.63.

This was the second consecutive day the counter was pushed beyond the 30% limit-up, or 30 sen for shares below RM1. When the takeover offer was announced on Tuesday, Focal Aims jumped 33 sen or 36.26% to close at RM1.24 a share.

Stockbrokers said minority investors are interested in Focal Aims after EcoWorld and Tian Xiong become the new majority shareholders of the company.

EcoWorld and Tian Xiong, Tan Sri Liew Kee Sin’s eldest son, have entered into a conditional share sale agreement with various shareholders of Focal Aims to acquire a 65.05% stake for RM230.69 million.

Liew, the group chief executive of S P Setia Bhd, is said to be close to the backers of EcoWorld, Tan Sri Abdul Rashid Abdul Manaf and Datuk Eddie Leong Kok Wah.  

“Some of these investors have ‘wild imaginations’, thinking that Focal Aims can grow much bigger with the potential of having links with S P Setia. There may be speculation involved in the counter,” said a remisier.

Another remisier said shareholders could be hoping for the offerors to raise the takeover price.

“They may even think that the company is valued more than its net assets per share,” said the remisier. The offer of RM1.40 per share is 11.11% higher than Focal Aims’ latest unaudited book value of RM1.26 per share as at end-June 30.

Once the share sale agreement materialises, EcoWorld and Tian Xiong are obliged to extend a mandatory general offer to the company’s other shareholders at RM1.40 per share in cash.

It will be interesting to see how the minority shareholders will react when the offer is officially made. There had been a few cases of other listed companies in which the offerors had to re-adjust their offer price several times to convince minority shareholders to part with their shares.

The latest example was Asas Dunia Bhd. Its major shareholders, comprising the family of executive chairman Tony Chan, made an offer of RM1.70 per share.

However, independent adviser Kenanga Investment Bank Bhd viewed the offer as “not fair and not reasonable”. The offer price of RM1.70 was far lower than the company’s revised net asset value of RM2.83 per share, or RM540.47 million, as at June 30 this year. Asas Dunia’s takeover offer was extended to Sept 23 from the first closing date of Sept 9.

 

This article first appeared in The Edge Financial Daily, on September 19, 2013.

 

 

 

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