Thursday 28 Mar 2024
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KUALA LUMPUR (June 3): AmInvestment Bank Bhd said YTL Corp Bhd’s 98%-owned unit YTL Cement Bhd’s mandatory takeover of Lafarge Malaysia Bhd (LMB) is not fair and not reasonable, and recommended LMB’s minority shareholders to reject the offer.

In an independent advice circular today, AmInvestment Bank said the offer was not fair because the offer price of RM3.75 represents a discount of between 2.2% to 18.5%, based on fair values of RM3.83 to RM4.60 a piece — which is derived from the sum of parts valuation (SOPV), which is in turn based on a discounted cash flow (DCF) valuation, after taking into account YTL Cement’s position as a market leader, which may increase cement prices.

The investment bank noted that the current low market price of Lafarge Malaysia’s shares since May 2018, was due to suspension announcements.

“Hence, the implementation of large infrastructure projects and or fruitful initiative of the Malaysian government in promoting affordable housing may potentially increase cement demand and contribute positively to the financial results of LMB Group and share price movement of LMB Shares,” said AmInvestment Bank.

AmInvestment Bank labelled the offer as not reasonable due to YTL Cement’s intention to maintain Lafarge Malaysia’s listing, unless the former or its associates hold more than 90% of Lafarge Malaysia shares, which would not be in compliance with Bursa Malaysia’s public spread requirements.

On the other hand, the investment bank noted that shareholders who hold small blocks of Lafarge Malaysia shares may still have the opportunity to dispose of their shares in Lafarge Malaysia, prior to the mandatory takeover offer’s conclusion on June 13, 2019 — due to YTL Cement’s intention to maintain Lafarge Malaysia’s listing status.

To recap, YTL Cement acquired a 51% stake in Lafarge Malaysia, from Associated International Cement Limited (AICL).

The offer triggered a mandatory takeover. This means that YTL Cement has to extend its offer of RM3.75 a piece for all the shares it does not own.

On May 30, 2019, the group announced that Datuk Seri Michael Yeoh Sock Siong, 58, was appointed as the group’s Managing Director.

The YTL group is controlled by the Yeoh Family and were appointed to the group’s board two weeks prior to Sock Siong’s appointment as MD.

On May 17, Sock Siong, alongside with his siblings Tan Sri Dr Francis Yeoh (executive chairman of YTL Corp), Datuk Yeoh Seok Kian (MD of YTL Corp), Datuk Yeoh Soo Keng and Datuk Yeoh Seok Hong, were all appointed Lafarge Malaysia’s executive directors.

As of 11:01am, shares of Lafarge Malaysia Bhd had traded 0.27% or a sen lower to RM3.74, with 103,900 shares exchanging hands, giving it a market capitalisation of RM3.19 billion.

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