KUALA LUMPUR: QL Resources Bhd’s takeover bid of Lay Hong Bhd at RM3.50 per share may be proving to be a slightly uphill task if its extension of the closing date from tomorrow to 5pm on Nov 26 is any indication, it told Bursa Malaysia yesterday.

Not surprisingly, QL, one of Asia’s largest egg producers and surimi manufacturers, did not state the reason for the extension in its filing with the exchange. “Save for the extended closing date, all other terms and conditions of the offer set out in the offer document [dated Oct 15] remain unchanged”, it added.

To recap, QL Resources made a conditional voluntary takeover of Lay Hong on Sept 24 for the shares it does not own in the poultry firm for about RM128 million or RM3.50 per share, following the non-reelection of its sole representative, Chia Mak Hooi, to the board of Lay Hong at the latter’s annual general meeting. QL was Lay Hong’s second largest shareholder and its stake in the poultry firm then was at 26.81%.

Based on Lay Hong’s unaudited net assets of RM2.43 as at June 30, the offer price was at a premium of 44% and the offer was conditional upon QL having received acceptances, which would result in it holding in aggregate more than 50% of the voting shares in Lay Hong.

But the conditional offer turned mandatory after QL upped its stake in the poultry firm between Sept 24 and Oct 7, resulting in its shareholding in the latter to exceed 33%. To date, its shareholding stands at 37.31%.

In a circular dated Oct 27, independent adviser Mercury Securities Sdn Bhd commented that the takeover offer was “fair” and “reasonable”.

However, it revealed that Lay Hong’s board — which is controlled by the firm’s founding Yap family with direct and indirect shareholdings in Lay Hong of an aggregate 44.76% — indicated their intention to reject the offer.

“Their intention was solely based on their own personal investment objectives and aspirations to continue their participation in the future growth of the Lay Hong group. This includes their aspirations as the founding shareholders of the group to continue driving its future growth with the hopes of steering the group to greater heights and be the leading player in the industry,” the advisers said.

Lay Hong’s board is helmed by Yap Hoong Chai as its managing director and with the Yap family’s aggregate shareholding of 44.76%, they will need about 5.24% to block QL’s offer. In contrast, QL, with its 37.31%, will have to gain another 13.69% for a successful takeover bid.

Lay Hong shares closed unchanged at RM3.45 yesterday, giving it a market capitalisation of RM174.15 million. QL’s share price was also unchanged at RM3.44, with a market cap of RM4.29 billion.

This article first appeared in The Edge Financial Daily, on November 4, 2014