KUALA LUMPUR (Apr 6): Independent adviser, MainStreet Advisers Sdn Bhd, has advised Mulpha Land Bhd’s shareholders to reject the takeover offer by Teladan Kuasa Sdn Bhd at 49.7 sen a share stating that it is “not fair and not reasonable”.
According to a circular filed with Bursa Malaysia today, MainStreet said that an offer price of 47.9 sen was “not fair” because it represents a discount of 29% from its realisable net asset value (RNAV) of 70 sen a share.
“We are of the view that the RNAV valuation is the most appropriate method in approaching the valuation of property-based companies such as Mulpha Land. Hence, the RNAV valuation is the main valuation methodology used to determine the fair value of Mulpha Land shares,” it said.
An analysis of Mulpha Land’s historical share price performance also showed a discount of 20.25% to the volume weighted average (VWAP) of Mulpha Land (fundamental: 1.3; valuation: 1.3)’s share price.
“Mulpha Land shares have generally been traded below the offer price during the past one year to last trading day (LTD). The offer price represents a range of premiums ranging between 2.16% and 8.71% over the one-month, three-month, six-month and one-year VWAP up to the LTD.”
“Mulpha Land shares have been traded above the offer price for the most recent period from the LTD up to the last practicable date (LPD). The offer price represents a discount of 20.25% to the VWAP for the period between the LTD and LPD,” said MainStreet.
MainStreet also said that the offer is “not reasonable” after it took into consideration the offeror’s intention to maintain Mulpha Land’s listing status, as well as Teladan Kuasa’s intention not to compulsorily acquire all remaining shares if it receives acceptances of not less than nine-tenth in nominal value of the offer shares and the rights of dissenting shareholders.
“Based on the above and MainStreet’s evaluation as a whole, MainStreet is of the view that the offer is not fair and not reasonable. As such, MainStreet recommends that the holders reject the offer,” said the independent adviser.
It added that the company’s non-interested directors have concurred with its evaluation and recommendation and have given the same advice to Mulpha Land shareholders.
To recap, Mulpha Land received a mandatory takeover offer from Teladan Kuasa, a private vehicle of Datuk Fakhri Yassin Mahiaddin, to acquire Mulpha Land shares at 49.7 sen a share.
The offer came after Teladan Kuasa exercised a call option to acquire 75 million option shares. This represents up to 32.85% equity interest in Mulpha Land.
Upon completion of the call option, the aggregate equity interest of Teladan Kuasa, Ketapang Capital Sdn Bhd and Fakhri, who are ultimate offerors and persons acting in concert with them, would reach 50.38% of Mulpha Land shares.
This call option exercise is expected to be completed in March 26, 2015.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)