Highlight Tham says gave much thought to E&O buyback

by **Cals** Fri 30 May 2014, 19:43

Highlight Tham says gave much thought to E&O buyback

Business & Markets 2014

Written by Anna Taing of theedgemalaysia.com

Friday, 30 May 2014 09:27

KUALA LUMPUR: When Datuk Terry Tham sold down his stake in Eastern & Oriental (E&O) Bhd to 5.1% in 2011, he agreed to stay on as managing director for at least three years.

Come August, the three years will be up and the question being asked is whether he will stay on or retire.

On Wednesday, that question was answered. Sime Darby Bhd said it was selling a 9.9% stake back to Tham at RM2.90 a share, a 26% premium to the RM2.30 it paid in 2011. Once the sale is completed, Tham, who is also the founder of E&O, will emerge as the second largest shareholder with a 15% stake, almost the same as the15.5% he held before he sold part of it to Sime Darby.

Sime Darby bought a 30% stake in E&O in 2011 from three vendors — Tham, Tan Sri Wan Azmi Wan Hamzah and GK Goh Holdings Ltd.

While the latest move surprised the market, the one question on most minds was why?

In particular, why sell at RM2.30 a share to Sime Darby three years ago and buy it back, at a higher price of RM2.90? Does he know something that the market does not?

Tham said he has been giving the matter a lot of thought as the three-year term nears an end. “Do I carry on? And the answer is yes, because I believe that there is much more that can be achieved in E&O.”

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Tham will emerge as the second largest shareholder once Sime Darby sells a 9.9% stake in E&O back to him

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Indeed, during a recent interview with The Edge, Tham said that for the group, the “best has yet to come”. Analysts seem to share this view, citing the Sri Tanjung Pinang phase 2 (STP2) project as a major catalyst for the group, going forward.

Tham told The Edge Financial Daily yesterday that the decision to raise his stake to a more meaningful level was also premised on the fact that at some point in the future, there will be a “management buy-in”. This means that members of E&O’s top management will end up holding stakes in the company. He said management has indicated their support for the “buy-in”.

“The deal [to buy back 10%] was signed yesterday. We have yet to finalise a formula and details for the management buy-in,” he said when asked how this will take place.

On why he paid RM2.90 a share, he said it was arrived on a “willing seller-willing buyer” basis, and the benchmark price “underscores my commitment to and confidence in E&O”.

What is obvious from the purchase is that Tham isn’t ready to retire any time soon.

He said this himself: “I thought I could work towards retirement, but I realised a number of things over the last two-and-a-half years or so — there is so much more that can be achieved in E&O, and I do still believe I am able to contribute significantly. On a more personal side, I want to continue to keep myself busy. The E&O brand has tremendous potential to grow, both locally and internationally.”

Tham said that going forward, he wants to build E&O into an even wider known brand than it is today — not just in Malaysia but in the UK, Europe, and even Japan. Tham said that the fact he lives in the UK enables him to have a closer ear to the ground insofar as opportunities are concerned.

To grow the brand further, it means more effort and hard work ahead.

Eric Chan, deputy managing director, said Tham’s demonstration of a commitment to stay via the bigger stake is a good platform for E&O to move up to its next level of growth.

This article first appeared in The Edge Financial Daily, on May 30, 2014.[/color][/size]