KUALA LUMPUR (April 19): The takeover offer of Cycle & Carriage Bintang Bhd (CCB) at a cash offer of RM2.40 a share by its largest shareholder Jardine Cycle & Carriage Ltd (Jardine CCL) is deemed not fair but reasonable by independent adviser Affin Hwang Investment Bank Bhd. 

In a circular note today, Affin Hwang said it is of the view that the offer is not fair as the offer price of RM2.40 is lower than the estimated realizable net asset value (RNAV) per CCB share.

“Based on the RNAV method, the equity value of CCB is approximately RM373.51 million which will translate to approximately RM3.71 per CCB share.

“The offer price of RM2.40 is lower than the estimated RNAV per CCB share, representing a discount of RM1.31 or 35.31% to the estimated RNAV per CCB share of RM3.71,” it said. 

However, the independent adviser said the takeover offer is deemed reasonable as CCB shares had consistently traded below the offer price for the one year prior to the last trading day (LTD), hitting a low of RM1.16 on March 23, 2020, until after the announcement on the receipt of the notice by the board on March 17, 2021. 

“The offer represents an opportunity for the holders to realise their investment in CCB at RM2.40 per offer share after the previous offer made by Jardine CCL to privatise CCB via a selective capital reduction and repayment exercise of CCB at an offer price of RM2.20 per CCB share.

“CCB shares are thinly traded, where the average monthly traded volume (excluding March 2021, which is deemed as an outlier) of 713,909 CCB shares for the past one (1) year up to March 2021 is approximately 1.73% of the free float of CCB shares,” it said. 

Affin Hwang also highlighted that since Jardine CCL does not intend to maintain the listing status of CCB, holders who do not accept the offer may risk holding unlisted CCB shares with no ready market for dealings in unlisted securities.

“Premised on the above, although the offer is deemed not fair, we are of the view that the offer is reasonable. Therefore, we recommend the holders to accept the offer,” Affin Hwang said. 

Meanwhile, CCB’s non-interested directors also concurred with the adviser’s evaluation and recommendation to accept the takeover offer.

At the time of writing, shares of CCB traded one sen or 0.41% lower to RM2.41, giving it a market capitalisation of RM242.79 million.