KUAL A LUMPUR (Dec 31): KAF Investment Bank Bhd (KAF IB) has urged shareholders in Merge Energy Bhd to reject the unconditional mandatory takeover offer by Westiara Development Sdn Bhd, Cerdik Cempedak Sdn Bhd, Fine Approach Sdn Bhd, Anjuran Utama Sdn Bhd, and Datuk Lee Tian Hock, as the offer is seen to be unfair and unreasonable.

According to a bourse filing today, KAF IB's independent advice on the takeover offer was because the offer "is not fair and not reasonable. Accordingly, we recommend the Holders to Reject the Offer".

This comes in as Lee, Westiara, Cerdik Cempaka, Fine Approach and Anjuran Utama offered to buy the remaining shares that they do not own in the company for 88 sen per share. KAF IB said the price represented a discount of 21 sen to 22 sen per share from its own valuation of RM1.09 to RM1.10 per share, constituting a discount of 19.27% to 20% per share, leading to the investmant bank calling the offer unfair.

KAF IB also said the group's shares are liquid as the counter's "average monthly trading volume of the free float of the shares of 16.47% is higher than the average monthly trading liquidity of the free float of FBM KLCI of 6.6% and the average monthly trading liquidity of the free float of Bursa Malaysia Construction Index of 11.44%", thus the offer is unreasonable.

The offer still stands until Jan 10, 2019.

On Dec 20, the offerors announced their takeover offer of 88 sen per share, with Hong Leong Investment Bank as the underwriter for the deal.

As of 1.47pm, the counter remained unchanged at 88 sen, with 87,500 shares traded. Its market capitalisation stands at RM58.96 million.