SYF shareholders advised to accept takeover offer

by **Cals** Tue 15 Apr 2014, 11:46

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Tuesday, 15 April 2014 10:09

KUALA LUMPUR: SYF Resources Bhd’s minority shareholders have been advised to accept its executive chairman and chief executive director Ng Ah Chai’s offer to acquire all the remaining shares in the company for 65 sen apiece.

In its independent advice circular yesterday, TA Securities Holdings Bhd described the offer as fair and reasonable, and therefore recommends that shareholders accept the offer.

TA Securities said the offer is not conditional upon any minimum level of acceptance as Ng already holds more than 50% of the voting shares.

“The offeror intends to close the offer at 5pm on April 24, being the first closing date,” it added.

An unconditional mandatory general offer (MGO) was triggered when Ng bought a 20% stake in SYF on March 13 this year from businessman Tan Sri Clement Hii, which led Ng’s shareholdings to escalate to 50.27% from 29.52% as at end-2013.

As a result, Ng launched an unconditional MGO at 65 sen a share, a 4.84% premium to the five-day volume-weighted average price.

Since then, the stock has increased 5.6% to a high of 66 sen on April 3 from 62.5 sen on March 11. The counter closed unchanged at 64.5 sen yesterday.

TA Securities said the offer price of 65 sen represents a premium of 2 sen or 3.17% to the revalued net asset value (RNAV) per SYF share of 63 sen based on the RNAV valuation methodology.

It also said that the offer price was within the range of the monthly traded market price of SYF shares for the latest one year prior to March 2014.

“In addition, the trading liquidity of SYF shares is low with an average monthly trading volume of approximately 2.918 million SYF shares, representing 2.98% of the free float shares of SYF.

“In view of this, the offer presents an opportunity for holders to realise their investment in SYF shares in cash and at a premium to its historical market prices,” said TA Securities.

“Premised on the above and our evaluation as a whole, we are of the opinion that the offer is fair and reasonable and not detrimental to the holders and accordingly, we recommend the holders to accept the offer,” it added.

TA Securities also noted that the offeror does not have any plan to liquidate the company, and intends to continue with SYF Group’s existing business and operations for the next 12 months after the closing date.

The acquisition was made principally to increase the shareholding of Ng in SYF Resources, enabling him to gain control of the businesses and operations in the group, said TA Securities, adding that the acquisition represents an investment by Ng as he envisages that the company would continue its efforts to grow and sustain its performance in the furniture and property businesses.

“In this respect, the acquisition would provide him with greater flexibility to plan the strategic business direction and utilisation of resources of SYF Group in enhancing the future growth of the group,” it said.

SYF, which has a market capitalisation of RM175.7 million, posted a net profit of RM4.4 million for the second quarter ended Jan 31, up 8.95% from RM4 million in the previous corresponding quarter.

This article first appeared in The Edge Financial Daily, on April 15, 2014.