Oversea Enterprise MTO gets only 500 shares

TheEdge Fri, Sep 18, 2020 01:02am - 3 years View Original


KUALA LUMPUR (Sept 17): At the price of 30 sen per share, Datuk Chai Woon Chet seemed to have made an attractive mandatory takeover offer (MTO) to the minority shareholders of Oversea Enterprise Bhd (OEB) given the restaurant chain’s share price had never traded at that high level since it was listed in April 2010.

Nonetheless, Chai’s MGO, which closed at 5pm today, only received 500 shares. It is not hard to fathom the low acceptance for the offer. OEB's share price rocketed to a record high of 86 sen on Aug 12 — nearly triple of Chai’s offer price — six days after the takeover offer was launched.

OEB share price retreated from the peak since then, hovering in the range between 69 sen and 79 sen. Still, the stock price was substantially higher than Chai’s offer.

Besides the takeover offer, there is no other material announcement made by the company. Nonetheless, the stock just rallied.

Interestingly, trading volume of OEB soared to above 30 million when the stock price escalated to its peak. There were 31.2 million shares traded when the OEB share price climbed to 78 sen on Aug 10 and 38.5 million shares traded on Aug 11 when it hit its all-time high of 82.5 sen.

The combined trading volume of 69.7 million shares in the two trading days is equivalent to a 28.7% stake in OEB.

To recap, Chai entered into a sale and purchase agreement with five parties to buy 151.26 million shares or a 62.37% stake in OEB for RM45.37 million.

The acquisition triggered the MTO at 30 share per share.

Minority shareholders of OEB, which owns and operates the Oversea restaurant chain, had been advised to accept the takeover offer by Chai, who is the managing director and substantial shareholder of Anzo Holdings Bhd.

In its independent advice circular to OEB shareholders, UOB Kay Hian Securities (M) Sdn Bhd (UOBKH) recommended that shareholders accept the offer as it finds the offer “fair” and “reasonable”.

According to the independent adviser, the offer is deemed fair as the 30 sen offer price is higher than the estimated fair value per share of 21 sen, representing a premium of 42.86%, and also above the market price of OEB’s shares as at the one-month, three-month, six-month, one-year, two-year and three-year volume weighted average price (VWAP).

The low acceptance for the MTO could be because minority shareholders have sold their shares on the open market taking advantage of the share price rally.

On the flip side, who has paid more than Chai to mop up those shares on the open market, noting that Chai did not acquire any shares, according to the filing with Bursa?

Furthermore, OEB’s earnings haven't been stellar. The company has been loss making for the past three financial years ended March 31.

For the financial year ended March 31, 2020 (FY20), the group’s net loss widened to RM5.41 million from RM2.9 million the year before.

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