KUALA LUMPUR (May 15): Perdana Petroleum Bhd rose as much as 3% after Dayang Enterprise Holdings Bhd announced its intention to undertake a mandatory general offer (MGO) for the former's shares.

Dayang (fundamental: 2.7; valuation: 2.1) already owns 29.77% in Perdana Petroleum (fundamental: 1.3; valuation: 1.4). Yesterday, Dayang said it signed a conditional share sale agreement with Affin Hwang Asset Management Bhd to acquire its 5.74% stake in Perdana Petroleum for RM66.59 million or RM1.55 a share.

The acquisition will raise Dayang’s stake in Perdana Petroleum to 35.51%. Based on Malaysian listing regulations, Dayang said it was required to undertake the MGO for the remaining Perdana Petroleum shares at RM1.55 each.

Dayang said it intended to maintain Perdana Petroleum's listing status on Bursa Malaysia.

Today, Perdana Petroleum shares rose as much as four sen to RM1.54 while Dayang added as much as 13 sen or 5% to RM2.77. The share trade of both stocks resumed today following a suspension yesterday
in conjunction with the corporate exercise announcement.

Today, both shares pared gains. At 10.45am, Perdana Petroleum was traded at RM1.52 with some 39 million shares done, making the stock the second most-active entity across Bursa Malaysia.

Dayang changed hands at RM2.66 with 173,800 shares traded.

It is interesting to note that analysts have placed a higher value for Perdana Petroleum shares.

CIMB Investment Bank Bhd said in a note today it had a target price of RM1.61 for Perdana Petroleum shares which was higher than Dayang’s offer price.

“We advise shareholders to keep their shares and hold out for a higher offer price when the MGO is launched,” said CIMB.

(Note: 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.)