This article first appeared in The Edge Financial Daily on February 11, 2020

KUALA LUMPUR: Shares in Cycle & Carriage Bintang Bhd (C&C Bintang) continued to fall yesterday, by as much as 26 sen or 14.4%, ahead of its extraordinary general meeting (EGM) today.

The downtrend, seen over the last few trading days, was likely due to concerns over whether the automotive company’s privatisation — which will be undertaken via a selective capital reduction (SCR) and repayment of RM2.20 per share — will go through or not.

The stock hit an intraday low of RM1.55 but pared some losses to close at RM1.62, still down 19 sen or 10.5%, giving it a market capitalisation of RM163.21 million, after 2.28 million shares were traded. It was the top 10th loser of the day on the local stock exchange. The stock has declined some 25% from when it was trading at RM2.07 last Wednesday. At the current level, its share price is some 26% below the SCR of RM2.20, but still above its share price before the announcement of the privatisation deal offer.

The Edge Financial Daily yesterday wrote, quoting corporate observers, that the sharp drop in C&C Bintang’s share price could be an indication that the SCR may not go through due to reports that Muar Ban Lee Group Bhd (MBL) is against the SCR. On Jan 6, The Edge Malaysia weekly, citing sources, reported that the minority shareholder of C&C Bintang, with a 1.02% stake as at Feb 28 last year, wrote to the company on Dec 26 expressing its intention to scuttle the privatisation bid.

MBL, a locally listed, family-owned palm kernel oil expeller manufacturer specialising in palm oil and oilseed crushing machinery, is of the view the offer price is not fair and it is not in the best interests of minority shareholders. The Johor-based firm is seeking higher compensation from Singapore-listed Jardine Cycle & Carriage Ltd (Jardine CCL), which wants to take C&C Bintang private. Jardine CCL is part of the empire of British family-owned Asian conglomerate Jardine Matheson Holdings Ltd.

It is worth noting that after the privatisation exercise was announced on Nov 11, 2019, the share price of the largest car dealer in Malaysia of German premium marque Mercedes-Benz surged by 64%, climbing from RM1.29 on Nov 8 to RM2.11 on Nov 13, and has been trading above RM2 for most of the past three months.