Pilgrim fund Lembaga Tabung Haji (LTH) has been aggressively increasing its stake in glove maker Latexx Partners Bhd.
Since early this month, LTH has mopped up about 4.62 million shares in Latexx, pushing up its shareholding from 5.37% or 11.68 million shares to 7.39% or 16.31 million shares, over the past month. LTH’s acquisitions from the open market have been between RM2.83 and RM2.90, the trading price band for Latexx shares from early February to last Monday.
This meant the pilgrim fund is in a position to make arbitrage gains, as there is an offer by Navis Asia VI Management Company Ltd and Mettiz Capital Ltd, to acquire the entire business and undertakings including the entire assets and liabilities of Latexx for RM852.03 million or RM3.10 a share.
An analyst said the arbitrage gains for LTH on the recent acquisitions could come up to some 8%.
“Considering the pilgrim fund has low transaction costs due to its huge trading volumes, it makes it an even more attractive proposition. This, however, is also a little risky, as it is not necessary for the company to pay the shareholders RM3.10 a share,” he said.
The pilgrim fund surfaced as a shareholder in Latexx in May 2010, controlling 10.68 million shares or 5.15% equity interest and carried on nibbling at Latexx stock until June. During that period Latexx’s stock traded at an average RM3.53.
In mid-July last year, LTH sold small blocks of Latexx stock when it traded between RM3.60 and RM3.70.
This article appeared in The Edge Financial Daily, February 16, 2011.
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