Tan Sri Vincent Tan’s move to privatise Berjaya Retail Bhd (BRetail), barely seven months after the company was listed, came as a huge surprise. Nonetheless, minority shareholders have nothing to lose and are set to gain handsomely from accepting Tan’s offer.
In fact, shareholders who want to make quick gains could just sell their shares in the open market, rather than register their acceptance of the offer. BRetail’s share price jumped 21.5 sen or 50.6% to close at 64 sen yesterday while BRetail-PA (irredeemable convertible preference shares or ICPS) gained 30 sen or 89.6% to 63.5 sen. Some 76 million units of the ordinary shares and 63,200 of BRetail-PA were transacted yesterday.
Minority shareholders have all to rejoice. This is because the privatisation of each BRetail share and its ICPS at 65 sen, which was proposed by Premier Merchandise Sdn Bhd, an investment vehicle owned by Tan, is a neat 15 sen or 30% premium above the initial public offering price (IPO) of 50 sen for both the ordinary shares and ICPS.
The offer price of 65 sen is also 16% more than the stock’s previous highest closing price of 56 sen, and 27.5% higher than the ICPS’ previous high of 51 sen.
Based on rough calculations, Tan who currently has a combined direct and indirect interest in BRetail of 85.16%, would need to fork out about RM144.3 million for the remaining interest that he doesn’t own in the company, which owns and operates a chain of 7-11 convenience stores and Singer outlets which have their businesses in marketing and direct selling of consumer durables via the instalment option scheme.
Given that the IPO of BRetail shares and ICPS seven months ago had only involved an offer for sale, Tan’s net outlay for the privatisation this round would be about RM90.9 million, after deducting the maximum amount of about RM53.4 million that he may have raised from BRetail’s IPO.
“Tan Sri Vincent Tan seems to be in a generous mood of late, with this privatisation news coming just shortly after he has publicly pledged to give half of his wealth to charity. However, this latest privatisation deal may also be a strategic move for other plans he might have for BRetail,” an observer noted.
It was stated in BRetail’s announcement to Bursa Malaysia that both the company’s stock and ICPS “have not performed well” since their listing, hinting that Tan’s privatisation move was driven by the perception that investors had not been appreciating BRetail. Interestingly, another of Berjaya group’s unit, Berjaya Food Bhd, was just listed last week.
Observers said the privatisation of BRetail made its mark as the shortest time for a stock to be listed on Bursa Malaysia before being taken private. BRetail was listed on Aug 16, 2010 and was taken private barely just seven months after its listing.
To recap, BRetail’s shares saw little investor interest since their listing with low volumes, while its ICPS were only traded for six days since listing.
Observers said that at the IPO price of 50 sen, the price to earnings valuation for the shares and ICPS had been priced at a trailing 22 times FY09 earnings and around 16 to 17 times FY10 estimated earnings.
Such valuation appeared to be on the high side and might have deterred investor interests. - by Daniel Khoo of theedgemalaysia.com
No comments:
Post a Comment