This article first appeared in The Edge Financial Daily on March 16, 2018

KUALA LUMPUR: Ideal Jacobs (M) Corp Bhd shareholders have been told to reject the takeover bid launched by Widad Business Group Sdn Bhd, which has been deemed “not fair and not reasonable” by independent adviser M&A Securities Sdn Bhd.

In August last year, Ideal Jacobs proposed to acquire Widad for RM520 million in cash and shares as part of its plan to diversify its business to include construction and integrated facilities management.

The proposed acquisition will result in Widad — which is controlled by Tan Sri Muhammad Ikmal Opat Abdullah and his wife Puan Sri Jamilah Mahamad Isa — emerging as a new controlling shareholder with a stake of more than 50% in Ideal Jacobs’ enlarged issued share capital and thus trigger a mandatory general offer.

In an independent advice circular yesterday, M&A Securities said in view of the offer price of 23 sen representing a discount of 6 sen-8 sen or 19.8%-24.84% to the estimated fair value per Ideal Jacobs share derived using the sum-of-parts valuation method of 28.68 sen to 30.6 sen, the offer is deemed not fair.

Additionally, the offer price is lower than the closing market prices of the Ideal Jacobs shares by between seven sen and 26 sen or 23.33% and 53.06% since the announcement of the proposals up to the latest practicable date of March 8.

M&A Securities said the offer is also not reasonable, considering the offeror intends to maintain the listing status of Ideal Jacobs on the ACE Market of Bursa Malaysia.

Premised on these factors, M&A Securities said it views the offer to be not fair and not reasonable. “Accordingly, we recommend that the holders reject the offer.”