KUALA LUMPUR (July 29): Minority shareholders of Leweko Resources Bhd have been advised to accept the takeover offer by Rengit Capital Sdn Bhd for the rest of the shares in the Ipoh-based timber company for 18 sen per offer share and one sen per offer warrant.
In its independent advice circular to Leweko shareholders on Bursa Malaysia today, UOB Kay Hian Securities (M) Sdn Bhd (UOBKH) recommended that shareholders accept the offer even though it finds the offer "not fair" but "reasonable".
According to the independent adviser, the offer is deemed "not fair" as the 18 sen share offer price and one sen warrant offer price are below the market prices as at July 22.
"The share offer price is below the estimated fair value of Leweko shares derived using the sum-of-parts valuation method, while the warrant offer price is below the theoretical value of the Leweko warrants derived using the trinomial option pricing model," it noted.
UOBKH said although the offeror intends to maintain the listing status of Leweko on the Main Market of Bursa, shareholders should note that the Leweko shares and warrants are relatively illiquid.
The average monthly trading volume-to-free-float of the Leweko shares and warrants up to June 27 of 0.94% and 2.5% respectively are lower than the average monthly trading liquidity of KLPRO index of 8.59%.
"Shareholders may have limited opportunities or it may require a longer time for shareholders to dispose their offer securities in the open market after the closing date. In the absence of a competing offer, the offer provides an opportunity to the shareholders to realise their investments in Leweko at the share offer price and warrant offer price," it said.
Thus, UOBKH is of the view that the offer is reasonable as it provides an exit opportunity to shareholders.
On June 28, Rengit Capital had acquired a 50.47% stake and 93.58% warrants holding in Leweko for RM30.18 million or 18 sen apiece and one sen per Leweko warrant, triggering a mandatory general offer for the rest of the shares and warrants in the company.
At 4.45pm, Leweko shares were down 0.5 sen or 2.33% at 21 sen, with 382,100 shares done, bringing a market capitalisation of RM67.6 million.