KUALA LUMPUR (May 11): Property company LBS Bina Group Bhd's unconditional mandatory takeover offer of ML Global Bhd at 56 sen per share and six sen per warrants was deemed as not fair and not reasonable by independent adviser MainStreet Advisers Sdn Bhd.
As such, the independent adviser has recommended shareholders to reject the offer.
"However, shareholders who wish to exit their investments in ML Global Bhd can also consider selling the shares and warrants in the open market, if they are able to obtain a price higher than the share offer price and warrant offer price, net of transaction cost," it said in its independent advise letter to ML Global shareholders today.
According to MainStreet Advisers, it derived a fair value of RM58.23 million or 65 sen per shares by adopting the sum-of-parts valuation (SOPV) methodology, and the offer price representing a discount of nine sen or 13.85% to the SOPV of ML Global.
"ML Global's shares have been traded above the offer price for the most recent period from the latest trading day (LTD) up to the latest practicable day (LPD). The Offer Price represents a discount of 6.67% to the latest practicable date.
Premised on the SOPV of the ML Global shares and the higher share price, after the upliftment of Practice Note 17 (PN17) status, the independent adviser are of the opinion that the offer price is not fair.
For ML Global's warrants, the firm adopted the trinomial option pricing model, given the warrants are American-style call option, which are exercisable anytime up to the date of expiry on Oct 27, 2019.
Based on the trinomial option pricing model, the firm has derived a theoretical value of 24 sen for each warrant.
As such, it said the warrant offer price of six sen apiece, representing a discount of 18 sen or 75% to the theoretical value of the warrants of 24 sen.
"ML Global warrants have been traded above the offer price for the most recent period from the LTD up to the LPD. The offer price represents a discount of 80.65% to the volume weighted average market price (VWAMP) for the period between the LTD and LPD," it explained.
It noted the offeror (LBS Bina) intends to maintain the listing status of ML Global, and with the listing status being maintained, shareholders would still have the opportunity to dispose of their securities in the open market, if they do not wish to accept the offer.
The non-interested directors also concurred with the evaluation and recommendation of MainStreet, stressing that the offer is not fair and not reasonable. They recommend the shareholders to reject the offer.
According to ML Global, as at LPD, LBS Bina holds 45.64 million shares and 9.17 million warrants, representing approximately 50.92% and 34.27% of the total outstanding shares and warrants.
The person acting in concert (PAC) holds 8,000 shares or 0.01% stake, and 2,000 warrants in the company.
LBS Bina had on April 11 LBS Bina Group Bhd has made an unconditional mandatory takeover offer for ML Global Bhd, after it raised its stake to 50.9%.
The offer price, LBS Bina said, was 56 sen per share and six sen per warrants for the shares which it does not own.
The takeover came after LBS Bina acquired 17 million shares in ML Global from the latter's managing director Datuk Beh Hang Kong for RM9.52 million or 56 sen per share via a direct business transaction.
Shares in ML Global was unchanged at 56 sen at midday trading break today, being the offer price by LBS Bina, after 50,400 shares exchanged hands; while LBS Bina was also unchanged at RM1.58 as of midday.