Highlight Higher rival offer for Kian Joo

by **Cals** Tue 11 Mar 2014, 11:01

Highlight Higher rival offer for Kian Joo

Business & Markets 2014

Written by Charles Yong of theedgemalaysia.com

Tuesday, 11 March 2014 08:49

KUALA LUMPUR: Tokyo-listed Toyota Tsusho Corp (TTC) has indicated its interest to buy 51% of Kian Joo Can Factory Bhd for a tentative maximum price of RM3.74 per share.

The offer from Toyota group’s trading arm is 13.3% higher than Aspire Insight Sdn Bhd’s earlier offer of RM3.30 per share to buy out the aluminium can manufacturing company.

TTC’s offer is perceived to be a competing bid for Kian Joo. When contacted Datuk Anthony See Teow Guan, who is Kian Joo’s executive director and substantial shareholder, said “the higher the better” but declined to elaborate.

In an announcement to Bursa Malaysia, Kian Joo said it received the letter of interest from TTC yesterday, which indicated its “non-binding interest” to acquire a 51% equity interest in the can manufacturer with “possible partner(s)”.

TTC said in the letter it intended to first commence discussions with Kian Joo via a memorandum of understanding, followed by due diligence. It maintains its right to recalculate the offer price of RM3.74.

If TTC succeeds in acquiring more than 33% of the company, a mandatory general offer (MGO) may be triggered.

Kian Joo said in the announcement that it had sought information from TTC on its profile, the identity of its possible partners, whether it or its subsidiaries are involved in the same industry, financing evidence of the proposed purchase, and the name of the seller of the 51% stake.

Among the substantial shareholders of Kian Joo are Can-One Bhd with 32.9%, the Employees Provident Fund (EPF) 10.03% and the See family, which founded the company, is believed to own more than 15%.

Trading in shares of Kian Joo’s 54.83% subsidiary Box-Pak (Malaysia) Bhd and its 32.9% owner Can-One Bhd was suspended from yesterday pending the announcement.

Should TTC succeed in acquiring a controlling stake in Kian Joo, it may also have to trigger an MGO for Box-Pak because it will own more than the 33% deemed interest in the corrugated carton box manufacturer.

In November last year, Kian Joo’s chief operating officer (COO) Chee Khay Leong, who is former COO of Can-One, together with other unidentified partners and the EPF launched a management buyout offer.

Through Aspire, they offered to buy out the assets and liabilities of Kian Joo for RM1.47 billion cash.

Kian Joo’s board of directors agreed to Aspire’s takeover offer in January. However, the deal appeared far from sealed. The Edge weekly reported in February that the board’s decision was not unanimous as Datuk Anthony See and his brothers — See Teow Koon and See Tiau Kee — were said to have disagreed.

The See brothers were expected to reject Aspire’s offer at the shareholders’ level. The offer must not see more than 10% disagreement for it to succeed.

It remains to be seen if the See brothers will accept TTC’s higher price.

The offer price of RM3.74 is still deemed low to some quarters as Kian Joo commands a lion’s share of the domestic aluminium can market.

Packaging company HPI Resources Bhd was taken private in 2011 by Oji Paper Co Ltd at a price to book value of 1.8 times. To match that yardstick, the offer price for Kian Joo’s shares will have to be more than RM4 each, according to some shareholders.

In addition, Kian Joo owns some parcels of prime land in the Klang Valley, some of which have not been revalued since 2009.

This article first appeared in The Edge Financial Daily, on March 11, 2014.