SC's Sime-E&O dilemma

KUALA LUMPUR: After being being bombarded with queries by the investing public and shareholder activists alike, the Securities Commission (SC) has issued a statement saying it is viewing all "stock transactions by all parties" in Sime Darby Bhd's acquisition of a 30% stake in property developer Eastern & Oriental Bhd (E&O).

"The SC continues to receive queries on the Sime Darby-E&O share transaction. We are also reviewing all stock transactions by all parties over the relevant period related to this matter. The outcome of these two reviews will only be known after all the relevant facts have been established," an SC spokesman said on Monday, Sept 12 in the statement.

In accordance with the SC's internal governance processes, the reviews on the acquisition are being led by the two most senior commission members, Datuk Francis Tan and Datuk Gumuri Hussain. SC chair Tan Sri Zarinah Anwar recused herself from the onset.

A red flag was raised when it came to light that E&O chairman Datuk Azizan Abd Rahman, Zarinah's husband, had accumulated some 450,000 shares in the property developer between April and August this year, prior to Sime Darby taking over the 30% block. This included 100,000 shares on Aug 12, about two weeks before the conglomerate announced its acquisition into the property developer.

In a nutshell, Sime Darby's takeover has stirred a hornets' nest. Many market watchers suggest that Sime Darby should be forced into making a mandatory general offer for E&O as the company, together with the three shareholders who sold the 30% block, have about 41% equity interest. The E&O shareholders who sold the block to Sime Darby include Datuk Terry Tham Ka Hon, who sold 12.2% leaving him with 5.15% equity interest, Tan Sri Wan Azmi Wan Hamzah who parted with 9.1%, and maintained 2.9% for himself and GK Goh Holdings Ltd which hived off 9.5%, and still controls 3.5%.

While the three and Sime Darby have vehemently denied acting in concert and have dismissed any form of collusion, many do not buy this and look to the SC to take action. Sime Darby's offer of RM2.30 a share has excited other shareholders as it was at a 60% premium to E&O's market price at the time and raised many questions.

"The SC's Statement of Principles and Standards requires the SC to observe the highest ethical and governance standards in the discharge of our functions. The SC has always upheld this and will continue to do so," the SC spokesman said in the emailed statement.