Delloyd Ventures says RM5.20 is the final price

by **Cals** Tue 09 Sep 2014, 17:23

Business & Markets 2014

Written by Liew Jia Teng of theedgemalaysia.com

Tuesday, 09 September 2014 09:19

KUALA LUMPUR: Automotive components manufacturer Delloyd Ventures Bhd has stressed that the revised buyout offer of RM5.20 apiece from Chung & Tee Ventures Sdn Bhd (CTVSB) to take the company private will be the final offer price for now.

“In any privatisation exercise, some shareholders are satisfied with the offer price while some want a higher price. But coming from the offerors and major shareholders’ [perspective], RM5.20 will be the final price at the moment,” deputy group managing director Datuk Leon Tee Wee Leng told reporters after the company’s annual general meeting here yesterday.

Wee Leng, who is the son of Delloyd Ventures group managing director and co-founder Datuk Seri Tee Boon Kee, said that the offerors will leave the decision on accepting the offer to the minority shareholders.

He said due to the challenging prospects for the automotive industry as well as plantation sector, the buyout offer made by CTVSB had already reflected a premium over the future earnings of the company.

“For many years, our share price has not been traded at this level. It has reached an all-time high because of this buyout offer. So, if the privatisation is not successful, we have no idea how it [share price] would perform,” said Wee Leng.

To recap, Delloyd Ventures had on May 16, 2014 proposed a selective capital reduction and repayment exercise by its single largest shareholder CTVSB, which owns a 34.24% stake. CTVSB is controlled by Boon Kee’s family. Together with the persons acting in concert, they hold a collective 63.58% stake.

On Aug 11, CTVSB raised its takeover offer price by 40 sen to RM5.20 per share, up from RM4.80 previously.

Subsequently on Aug 12, shares in Delloyd Ventures, which had been relatively illiquid, surged to a record high of RM4.96 since the company’s listing in November 1996.

Also speaking at the press conference was Boon Kee, who expects the privatisation exercise to be completed by March 2015, provided shareholders give the go-ahead at an extraordinary general meeting in December. The independent advice circular is expected to be despatched in November.

Boon Kee highlighted that regardless of the listing status of Delloyd Ventures, its business will remain as usual.

Delloyd Ventures supplies automotive parts and components to major car manufacturers and assemblers, including Proton, Perodua, Nissan, Toyota and Honda. It has eight manufacturing plants in Malaysia, Indonesia and Thailand.

According to its executive director Datuk Noor Azmi Jaafar, Proton’s new compact model as well as the soon-to-be launched Perodua Axia will dictate the growth of the group’s core automotive parts business.

“The majority of our supplies are to the two national carmakers, namely Proton [Proton Holdings Bhd] and Perodua [Perusahaan Otomobil Kedua Sdn Bhd]. They have not been producing new cars [in the recent years] and hence our sales were flat,” he commented.

Noor Azmi, who is also the managing director of Delloyd Ventures’ automotive parts division, said Proton and Perodua contribute about 60% of the group’s auto parts sales.

On the oil palm plantation business, Wee Leng said Delloyd Ventures may pare down its stake in the Indonesian subsidiary PT Rebinmas Jaya, should the local government lower the limit on foreign ownership in plantation land there to 30%.

“It is a threat to us because if the Bill is passed, we need to sell down our stake [in Rebinmas Jaya] and subsequently see lower revenue contribution from Indonesia,” he said.

Rebinmas Jaya is currently 95%-owned by Malaysian firms, of which 60% is held by Delloyd Ventures.

This article first appeared in The Edge Financial Daily, on September 9, 2014.