This article first appeared in The Edge Financial Daily on March 12, 2019

KUALA LUMPUR: Minority shareholders of Kian Joo Can Factory Bhd have been advised to accept the takeover offer by Can-One International Sdn Bhd for the rest of the shares in the company for RM3.10 per share.

In its independent advice circular to Kian Joo shareholders on Bursa Malaysia yesterday, UOB Kay Hian Securities (M) Sdn Bhd said it is of the view that the offer to acquire Kian Joo is “not fair” but “reasonable”.

According to UOB Kay Hian, the offer is deemed not fair as the RM3.10 offer price represents a 25 sen or 7.46% discount to the estimated fair value of RM3.35 per Kian Joo share.

However, it finds the takeover offer to be reasonable as Kian Joo shares have not traded above the offer price for the past two years.

As at last Wednesday, the offer price still represented a 1.31% premium over the last transacted price of RM3.06 per Kian Joo share.

It is the intention of the joint offerors not to maintain the listing status of Kian Joo on the Main Market of Bursa.

“The offer is reasonable as it provides an exit opportunity to [shareholders] to realise [their] investment in Kian Joo at the offer price,” said UOB Kay Hian.

“We advise and recommend the holders to accept the offer,” it added.

On Feb 14, shareholders of Can-One Bhd agreed to go ahead with the proposed mandatory general offer (MGO) for its 32.9%-owned associate Kian Joo at RM3.10 per share. As a result of the acquisition, Can-One’s shareholding in Kian Joo increased from 32.9% to 33.39%.

On Feb 19, Can-One extended the MGO for the remaining 66.61% stake in Kian Joo it did not own at RM3.10 apiece. The offer will remain open for acceptance until 5pm on March 22.