Frankly Speaking: A question of timing

This article first appeared in The Edge Malaysia Weekly, on August 24, 2020 - August 30, 2020.
Frankly Speaking: A question of timing
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On Aug 10, GPA Holdings Bhd confirmed that its major shareholder Tan Sri Robert Tan Hua Choon — who is also non-independent, non-executive chairman of the board — had been approached by several interested parties, including Regal Orion Sdn Bhd, for possible asset injection into the company. The possible reverse takeover (RTO) had been reported by The Edge,  which led to Bursa Malaysia querying GPA. The company added that the board will release the necessary announcement in a timely manner if there is any material development.

Interestingly, exchange filings indicate that, in early July — a month before the article was written — Tan had acquired almost 45.34 million shares, or 4.62%, in GPA, strengthening his shareholding to 277. 65 million shares, or 28.32%. When he acquired the stake, the stock was trading at less than 10 sen. A month later, in August, the shares were trading at 20 sen. Last Friday, the counter closed at 15.5 sen, up 55% from the 10 sen that Tan paid.

Tan may be GPA’s non-executive chairman, but he is more than likely to have known about the potential RTO, as indicated by the company’s reply to the query. Is then right for him to be raising his stake in the company at this time?

While Tan has yet to make a profit from the acquisition, as he has not sold the shares, buying such a big block of shares in the thinly traded GPA does not look good. High-level company officials and executives have to refrain from trading shares during sensitive periods when they are privy to market-sensitive information, as they may run afoul of insider trading laws.

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