Some opine that shareholders should ask for a higher price for the takeovers, considering that both offer prices are at significant discounts to the book values of the two companies.
On Friday, OSK Property’s major shareholders offered to buy up the remaining of the company they do not own for RM120mil or 87 sen per share.
The stock closed at 79.5 sen just a day before the offer was made. This means that the offer price by OSK Property’s major shareholders was at a mere 9% premium over the last traded market price.
Against OSK Property’s latest net assets per share of RM1.74, the offer price is a 50% discount.
For the financial year ended Dec 31, 2010 (FY10), the company posted revenue of RM144.9mil against RM125.8mil a year ago. Net profit for FY10 was RM11.9mil against RM5.1mil in FY09.
As at the end of FY10, OSK Property’s cash and cash equivalents stood at RM53.2mil.
The company currently trades at 11.25 times price/earnings ratio and has a market capitalisation of RM163.02mil.
Interestingly, the offerors did not provide any rationale for making the offer to take over OSK Property.
Considering the offerors for OSK Property – led by Ong Leong Huat – is making a general offer for the shares of the former, they would need to secure up to 90% acceptances before they can take the company private. This would mean that shareholders have ample room to reject the offer on the table if it is not up to expectations, explained an analyst.
In the case of AP Land, the offer was at 45 sen per share, which is a 9.8% premium over AP Land’s last traded price of 41 sen before the announcement was made, but only 7.7% over yesterday’s closing price of 41 sen.
AP Land’s net asset value per share has stayed above RM1 since 2005.
Under the new takeover rules, offerors will need at least 75% of non-interested shareholders to accept an offer before it can go through.
“This puts more power into the hands of minority shareholders, who can insist of a higher price for the assets of their company,” said one analyst.
On the other hand, the takeover offers do provide an exit opportunity for minority shareholders in companies whose share prices have not performed.
Analysts said that in general, the rationale for these exercises was that both companies had failed to attract market attention and therefore the value of their shares did not reflect the companies’ underlying strengths.
AP Land’s offeror is its parent company, the Low Yat group, which stated the following as the rationale for its exercise: “The liquidity of the trading of AP Land shares has been relatively low, with a trading volume of approximately 349,429 AP Land shares per day during the past one year.
“Therefore, it may not be easy for the shareholders of AP Land to be able to realise their investments in AP Land on the open market.
“The proposals will accord an opportunity for all AP Land shareholders to realise their investment in the company in the short to medium term at a reasonable premium above the historical market prices of AP Land shares ...”
AP Land’s major property projects include Bandar Tasek Puteri in Rawang and a residential development comprising luxury apartments in the Niseko region of Hokkaido, Japan.
Properties under OSK Property’s stable include luxury homes, townships and The Atria Shopping Complex in Damansara Jaya.
By The Star