Kian Joo receives offer of RM1.47b

by **Cals** Wed 27 Nov 2013, 10:19

Business & Markets 2013

Written by Madiha Fuad of theedgemalaysia.com

Wednesday, 27 November 2013 10:00

KUALA LUMPUR: Kian Joo Can Factory Bhd announced yesterday that it had received an offer from Aspire Insight Sdn Bhd to buy over its entire business and undertakings for RM1.47 billion or RM3.30 per share.

In a filing with Bursa Malaysia yesterday, Kian Joo said its board of directors will appoint the relevant advisers before deciding on the next course of action in respect of the offer.

The RM3.30 offer is higher than Kian Joo’s net assets per share of RM2.29 as at end-September 2013 and last traded price of RM3.21.

The offer to Kian Joo includes taking over the assets and liabilities of the can manufacturer, according to the offer letter to Kian Joo.

Shareholders of Aspire Insight include Ekuiti Merdu Sdn Bhd and Alleyways Sdn Bhd.

Ekuiti is wholly owned by the Employees Provident Fund (EPF), a substantial shareholder of Kian Joo.

Alleyways is majority owned by Kian Joo chief operating officer (COO) and executive director Chee Khay Leong. On Monday, Chee resigned as COO of Can-One Bhd, a position he held since 2005.

The Edge Financial Daily, quoting sources, reported yesterday that the EPF and Can-One were joining hands to take over assets of Kian Joo and Box-Pak (M) Bhd.

“The consideration will be settled upon completion by way of cash in immediately available funds into an account to be designated in writing by Kian Joo,” the offer letter from Aspire Insight said.

Upon completion of the acquisition, without a core business and cash-rich Kian Joo may be classified as an affected listed issuer under Practice Note 17 of the Listing Requirements.

As such, Aspire Insight will propose to Kian Joo’s board a consideration of a capital repayment. Upon implementation of the capital repayment, Kian Joo shall apply for its shares to be delisted from the Main Market.

“For avoidance of doubt, the parties agree and acknowledge that Kian Joo’s capital repayment is conditional upon the proposed acquisition but the completion of the proposed acquisition will not be conditional upon the completion of the capital repayment,” Aspire Insight said.

In a statement yesterday, Aspire Insight said the offer was to diversify the revenue streams of Kian Joo’s business.

“Aspire Insight is of the opinion that while there is potential for growth in Kian Joo’s business, this will necessitate increased capital investment and potential exposure to risk which may impact Kian Joo’s earnings in the short term,” it said.

The group said the offer would achieve its goal of long-term sustainable growth for Kian Joo’s business while eliminating short-term volatility for Kian Joo’s shareholders.

“We believe that the offer represents an opportunity for all investors to realise value and exit at a premium to the volume weighted average price over the past 12 months while avoiding the constraints of historically low trading volumes,” it said.

Upon the completion of the proposed acquisition, Aspire Insight will become a substantial shareholder of Kian Joo’s subsidiary, Box-Pak (M) Bhd, with a 54.83% stake, for which it will be obliged to extend a mandatory general offer for all the remaining Box-Pak shares not already owned.

Can-One, a can manufacturer, owns 32.9% of its largest competitor, Kian Joo, which in turn owns 54.83% of Box-Pak, a manufacturer of corrugated boxes.

The EPF currently has a 10.03% stake in Kian Joo.

The trading of shares in the three related packaging manufacturers was suspended from Monday until tomorrow.

According to sources, for the acquisition to proceed, Can-One and the EPF will require 75% approval from the remaining 57.07% shareholders.

Kian Joo had a market capitalisation of RM1.43 billion as at Nov 25, against Box-Pak’s RM135.05 million and Can-One’s RM527.3 million.

Kian Joo’s total assets as at June 30 were RM1.46 billion. Box-Pak had RM272.47 million as at Sept 30, while Can-One had RM1.07 billion as at June 30.

Kian Joo registered a net profit of RM120.7 million for its 2012 financial year.

This article first appeared in The Edge Financial Daily, on November 27, 2013.