"Based on various materials available to (Primus), it is estimated that the fair and reasonable figure of price would be at least RM6.177 billion," Primus, via its local unit Primus (Malaysia) Sdn Bhd, said in its petition, which was viewed by Business Times yesterday.
That price, which is understood to work out to RM8.91 a share, is 22 per cent higher than Hong Leong's offer of RM7.30 a share. Hong Leong's offer values EONCap at 1.4 times book value.
The difference in price of about RM1.12 billion is the amount that Primus wants the directors to pay the company in damages should the current Hong Leong offer be passed at an extraordinary general meeting (EGM).
Primus is against the deal as its entry cost in the bank in 2007 was much higher - at RM9.55 a share - than the takeover offer. Hong Leong's offer fundamentally undervalues EONCap, it claimed.
It said that an independent financial adviser, Credit Suisse, had found the offer to be "not fair or reasonable" from a financial perspective and its advice was to reject it.
As Hong Leong is doing a takeover of EONCap's assets and liabilities, not its shares, it needs only 50 per cent plus one vote for the deal to be successful at an EGM.
The three biggest shareholders which have indicated they want to sell - Rin Kei Mei, Tan Sri Tiong Hiew Kheng and Khazanah Nasional Bhd - already hold a combined 41.7 per cent stake.
This means that the takeover's success at an EGM depends largely on how the Employees Provident Fund (EPF), a 12.3 per cent shareholder, votes. The EPF also owns 13 per cent of Hong Leong.
At this stage, however, faced with Primus' lawsuit, it is unclear if EONCap will call for an EGM. Analysts think it may choose to focus on the lawsuit first.
EONCap's share price closed 2 sen higher to RM6.95 on Bursa Malaysia yesterday.
By Adeline Paul Raj
Business Times
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