KUALA LUMPUR (Feb 16): BDO Capital Consultants Sdn Bhd (BDO CC) has advised minority shareholders of Masterskill Education Group Bhd not to accept a take-over bid by Arenga Pinnata Sdn Bhd, as it considers the offer "not fair" and "not reasonable".

In an independent advice circular filed with Bursa Malaysia today, BDO CC said the offer price of 60 sen is lower than the range of estimated fair value per voting sharea, a discount of between 2.38% and 9.77%.

It added that the offer price of 60 sen per share is a discount of 15.49% to Masterskill’s last closing price of 71 sen on Jan 9, as well as discounts ranging from 8.97% to 16.48% to the five-day, one-month and three-months volume weighted average price up to Jan 9.

The offer price is also lower than Masterskill’s net asset per share, which stood at 62 sen as at Sept 30, 2014.

On the reasonableness of the offer, BDO CC said Masterskill shares are considered to be liquid, with an average monthly trading volume-to-free float of 80.97% in 2014 as compared to the trading liquidity of the Bursa Malaysia Trading/Services Index, which stood at 15.56% in the same year.

“Premised on the above and their evaluation on the whole, BDO CC is of the opinion that the offer is not fair and not reasonable. According BDO CC recommends the holders to reject the offer,” the independent adviser said in the circular.

Masterskill’s non-interested directors have also agreed with the assessment and recommendation by the independent adviser.

Arenga Pinnata is a special purpose vehicle owned by private equity firm Creador II LLC.

To recap, Arenga Pinnata had on Jan 12, launched a conditional takeover for the shares that it does not own for 60 sen apiece.

Masterskill (fundamental: 0.8; valuation: 0.6) has been loss-making since financial year ended Dec 31, 2011 (FY13), which was the last year it registered a net profit of RM38.14 million.

Its revenue has fallen, due to reduction in student enrolment to 2,087 students in FY14, a significant plunge of 85.33% or 12,142 students from 14,229 students recorded in FY13.

Masterskill’s shares closed unchanged at 61 sen today, giving it a market capitalisation of RM229.41 million.

(Notes: 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)