Will the takeover offer for M3nergy Bhd succeed by a razor-thin margin today? Or will this second attempt fail again?
Adamus Avenue Sdn Bhd, which made an offer to take M3nergy private, has received 88.77% of voting shares for the privatisation move, just one day shy of its extended deadline which is 5pm today.
Adamus Avenue, a privately-owned company of M3nergy’s managing director and CEO Datuk Shahrazi Sha’ari and his wife Datin Tinawati Nordin, had in May launched a conditional takeover of the oil and gas player at RM1.85 per share.
In an announcement to Bursa Malaysia yesterday, the advisers of Adamus said it had received an additional 0.66% of the voting shares of M3nergy, for which the acceptances were still pending confirmation.
This means, collectively, Adamus had 89.43% of all voting shares of M3nergy as of yesterday. “The party that is taking M3nergy private needs the physical acceptance forms that make up to over 90% for the privatisation to go through,” noted an investment banker.
This is the second takeover offer for M3nergy in the span of nearly two years.
Back in August 2008, Melewar Equities (BVI) Ltd — the largest shareholder of M3nergy — undertook a takeover bid for the oil and gas company at RM1.20 per share.
Some minority shareholders were unhappy with the offer, citing it as too low compared to the company’s net tangible assets (NTA) per share of RM3.30 then. When the first offer closed in November 2008, Melewar managed to acquire only a 72.78% stake and was not able to take the company private.
The current privatisation offer also has not had a smooth ride, having been extended twice already. Its first closing was June 25, which was extended to July 7 and then extended again to today.
Additionally, M3nergy’s board had on July 23 announced that it concurred with its financial adviser HwangDBS Investment Bank Bhd that the conditional takeover offer from Adamus was not fair and not compelling.
The independent adviser — TA Securities Holdings Bhd — had also given a similar view that the offer was not fair and not reasonable.
According to M3nergy’s independent advice circular to shareholders, the offer provides shareholders the opportunity to realise their investment in the company at a higher return than it would in disposing of M3nergy’s shares in the open market, given that the shares are thinly traded and trading volume is low.
Even so, independent adviser TA Securities noted that the historical market prices of M3nergy shares and the offer price were at significant discount to the NTA per share. It noted that the average price-to-book ratio for domestic listed oil and gas stocks was 1.86 times, based on their share prices on May 27.
The offer price for the current takeover offer of RM1.85 per share was at a premium of 16 sen or 9.47% over the closing share price of RM1.69 on May 14, before the stock was suspended and the takeover offer announced on May 17.
The offer price is, however, at a substantial discount of RM1.34 per share, or 42% below M3nergy’s NTA per share of RM3.19 as at March 31, 2010.
Effectively, it prices the company at just 0.58 times book. The stock ended one sen lower at RM1.82 yesterday.
By the end of today, it will be known whether it’ll be second time lucky, or a second failure, for the privatisation of this oil and gas company.
This article appeared in The Edge Financial Daily, August 3, 2010.
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