PETALING JAYA: The unconditional voluntary takeover offer by Yee Lee Corp Bhd’s major shareholders to acquire the remaining shares they do not already own in the company for RM2.33 a share is deemed not fair but reasonable, said independent adviser Affin Hwang Capital.
Affin Hwang Capital said the offer is not fair as the offer price represents a discount of 31.87% to 40.71% to the estimated fair value of Yee Lee shares of between RM3.42 and RM3.93, although the offer price represents a premium to the historical market prices of Yee Lee shares over the past 12 months up to and including the last trading day (LTD).
However, it opined that the offer is reasonable as Yee Lee shares have been thinly traded over the past 12 months up to March 2019, with an average monthly trading volume (as a percentage of free float) of 0.89%.
“The trading liquidity of Yee Lee shares is comparatively lower than KLCPI’s average monthly trading volume (as a percentage of free float) for the past 12 months up to March 2019 of 4.21%,“ it said in its independent advice circular. Accordingly, it recommend that the holders accept the offer.
In addition, one of the joint offerors Langit Makmur Sdn Bhd has been actively acquiring Yee Lee shares from the open market during the period between the LTD and the latest practicable date (LPD), whereby its shareholding in Yee Lee has increased from nil as at the LTD to 2.56% as at the LPD.
As a result, the joint offerors’ shareholding in Yee Lee has correspondingly increased from 58.41% as at the LTD to 60.96% as at the LPD.
“Hence, in any case, whether the joint offerors receive valid acceptances upon the completion of the offer or Langit Makmur continues to acquire Yee Lee shares, the liquidity of Yee Lee shares is expected to tighten further (due to lower public shareholding spread) and consequentially, holders may find it difficult to dispose of the offer shares in the open market.”
In this regard, the offer presents an opportunity for holders to realise their investment in the Yee Lee shares on a wholesale basis in cash and at premium to its historical market prices.
“Save for the offer, the board has not received any competing offer for the offer shares or any other offer to acquire the assets and liabilities of Yee Lee,“ said Affin Hwang Capital.
It noted that the offer is the only available offer for the holders’ consideration and the joint offerors do not intend to maintain the listing status of Yee Lee on the Main Market of Bursa Securities.
To recap, Yee Lee received the voluntary takeover offer from Yee Lee Organization Bhd, executive chairman Datuk Lim A Heng @ Lim Kok Cheong, Datin Chua Shok Tim @ Chua Siok Hoon, Lee Ee Young and Langit Makmur Sdn Bhd last month.
Lim is also chairman of Spritzer Bhd. As at the LPD, the joint offerors hold a 60.96% stake in Yee Lee Corp.
“The non-interested directors concur with our opinion that the offer is not fair but reasonable. Accordingly, the non-interested directors recommend that the holders accept the offer,“ it added.
