KUALA LUMPUR (Oct 27): Public Investment Bank Bhd (PIVB), the independent advisor appointed by Goh Ban Huat Bhd (GBH) in the mandatory takeover offer by Paragon Adventure Sdn Bhd (PASB) at RM1.40 per share, said the offer is fair and reasonable. 
 
GBH said the board of directors concurred with PIVB's recommendation for shareholders to take up the offer. 
 
"Nonetheless, holders are advised to closely monitor the announcements made by the offeror and market price of GBH shares and warrants, prior to the closing date, before making decision as to whether to accept or reject the offer," it said in a circular to the shareholders.  
 
PIVB said it used the sum-of-parts valuation (SOPV) method to arrive at the fair value of GBH shares, so each segment of the business is valued differently. The net asset based method is used for the manufacturing segment, the discounted cash flow method is used for the segment method, and the revalued net asset valuation method is used for the investment segment.
 
"Based on the SOPV methodology, the range of estimated fair value of GBH is RM1.29 to RM1.30 per GBH share. The shares offer price of RM1.40 per offer share is higher than the estimated fair value per GBH share, which represents a premium of RM0.10 to RM0.11 or 7.69% to 8.53% over the range of estimated fair value per GBH share," the circular said. 
 
Meanwhile on the reasonableness of the offer, PIVB said GBH shares were illiquid, as the average monthly trading volume of the free float of GBH shares for the past 12 months up to September (excluding outliers) of 0.07% is lower than that of KL Industrial Production Index of 10.81%. Thus, the shareholders may have limited opportunities to realise their investment in GBH in the open market at a price equivalent to or higher than the shares offer price.  
 
"We are of the view that the offer is reasonable, as it provides an exit opportunity to the holders (especially for those holding a significant number of the offer securities) to realise their investment in GBH in cash at the offer price," GBH said. 
 
On Sept 27, GBH announced that PASB made a mandatory takeover offer after it emerged as a 51% shareholder of GBH, after buying the equity stake from Tan Sri Tan Hua Chun, together with 51% of the total outstanding GBH warrants.