KUALA LUMPUR (May 23): The cash offer price of RM2.70 per offer share for the 76.74% acquisition of KAF-Seagroatt and Campbell Bhd (KAFSC) by KAF Investment Bank Bhd has been described as “not fair” but “reasonable” by independent adviser Public Investment Bank Bhd.

The adviser, appointed by KAFSC board, recommended that holders accept the offer, but closely monitor the market prices of KAFSC shares prior to the closing date, before making decision on accepting or reject the offer.

“Based on our analysis, we are of the view that the offer is reasonable, as it provides an exit opportunity to the holders to realise their investments in the KAFSC shares in cash at the offer price which is at a premium over the market prices for the last two years up to the last practicable date of May 16, 2016 in an efficient and expeditious manner, especially for those holding a considerable number of shares,” it said.

In the independent advice circular (IAC), Public IB explained it was of the view that the offer price was below the fair value of KAFSC share at RM2.75 derived from adjusted net assets, computed based on the unaudited consolidated statement of financial position at at Feb 29, 2016.

In valuing the reasonableness of the offer, Public IB said based on its analysis on the KAFSC shares for the past two years up to the latest practicable date (LPD), it has never been traded above the offer price.

It said RM2.70 represents a premium ranging from 0.37% to 64.63% over the historical market prices of KAFSC shares for the past two years, up to the LPD and premium over the volume-weighted average market price (VWAP) of the KAFSC shares.

“The offer price is also higher than the traded share price of the KAFSC shares since February 2005. Based on our evaluation, we note that the shares are considered to be relatively illiquid. Thus, holders may have limited opportunities to realise their investments in the shares in the open market at the offer price.

“The shares were thinly traded for the past two years, up to the LTD (latest trading date) with average monthly trading volume of 667,058, representing 2.55% of the free float of KAFSC shares,” it added.

Recall that on July 30, 2015, KAF Investment Bank Bhd entered into a conditional share sale agreement with AKKA Sdn Bhd, AKKA Holdings Sdn Bhd, as well as vendors Thariq Usman Ahmad and Datuk Khatijah Ahmad to aquire 92.09 million shares or 76.74% equity in KAFSC for RM248.6 million.

Upon completion of the acquisition, KAF IB would become a major shareholder in KAFSC, which will trigger a mandatory take-over offer to acquire the remaining shares, accordingly.

On April 21, 2016, KAFSC announced the board is not seeking another person to undertake a take-over offer for the offer shares.

At 12.48pm, KAFSC remained unchanged at RM2.69, with 47,500 shares, valuing it at RM322.8 million.