Integrax board advises shareholders to reject Tenaga's offer again

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KUALA LUMPUR (Mar 4): Integrax Bhd directors have advised minority shareholders to reject the revised take-over offer of RM3.25 a share by Tenaga Nasional Bhd. This is because the higher offer does not reflect the intrinsic value of port operator Integrax (fundamental: 1.65; valuation: 0.6).

In a filing with Bursa Malaysia today, Integrax said independent adviser M&A Securities Sdn Bhd viewed the offer as “not fair but reasonable.” This was despite state-controlled utility Tenaga (fundamental:1.3; valuation: 1.8) upping its offer price from the initial RM2.75 a share.

Integrax said M&A Securities had deduced that the revised offer of RM3.25 was not fair, considering that the price was still lower than the revised net asset value per Integrax share at betweeen RM3.60 and RM3.66.

The offer was, however, deemed reasonable after considering the historical trading activity of Integrax shares and the absence of competing or alternative offers.

“Notwithstanding that the board concurs with the opinion of M&A Securities, the board, in the absence of an alternative or competing offer(s) and after careful examination of M&A Securities’ evaluation, recommends that holders reject the revised offer,” Integrax said.

On January 9 this year, Tenaga made the take-over offer for the remaining stake it did not own in Integrax at RM2.75 a share.

The offer price was subsequently raised to RM3.25 a share after other major Integrax shareholders argued that the initial offer was not high enough.  

As at last Wednesday, Tenaga owned 24.08% in Integrax, according to the take-over circular to Integrax shareholders.

Integrax board's latest stance is despite M&A Securities now advising shareholders to accept the revised offer, eventhough it deemed the revised offer "not fair but reasonable".

M&A Securities said its changed view on the offer by TNB (fundamental:1.3; valuation: 1.8) was due to the "updated value of Integrax share ranging from RM3.60 to RM3.66 is now only 10.8% to 12.6% higher than the revised offer price" of RM3.25 from RM2.75 previously.

M&A Securities also advised shareholders to consider disposing Integrax shares in the open market during the offer period if the market price of Integrax shares is higher than the revised offer price.

Nevertheless, M&A Securities has reiterated its opinion that the revised offer is not fair, given that the updated value of Integrax shares of RM3.60 to RM3.66 is higher than the revised offer price. 

"(But) we reaffirm that the revised offer is reasonable (given) that the trading of Integrax shares is relatively illiquid when compared with the trading of the shares of the FBM KLCI.

"(We also) note that the (Integrax) board has not received any competing offer for Integrax shares nor any other offer to acquire the assets and liabilities of Integrax. Further, the board does not intend to seek another person to make an alternative take-over offer for the offer shares," it added.

At 12:30pm today, Integrax shares fell one sen or 0.3% to settle at RM3.17 for a market capitalisation of RM953.6 million.

The stock had risen 39% this year, outperforming the FBM KLCI's 3% gain.

(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.)