KUALA LUMPUR (Sept 3): MIE Industrial Sdn Bhd has emerged as the new controlling shareholder of Seremban Engineering Bhd (SEB) with a 69.72% stake, triggering a mandatory general offer (MGO) for the loss-making engineering group that specialises in the fabrication of process equipment and metal structures.

According to a notice of the offer the group received today, MIE has inked two share sale agreements with Success Transformer Corp Bhd (STC) which owned 65.26% of SEB, and four other existing SEB shareholders, to acquire the stake, comprising 55.55 million shares, for RM27.77 million or 50 sen apiece.

The four shareholders were Omega Attraction Sdn Bhd which held a 4.31% stake; followed by STC managing director (MD) Tan Ah Bah @ Tan Ah Ping (0.07%), who is also a non-independent and non-executive director of SEB; STC executive director Pan Kim Foon (0.01%) and STC deputy MD Tan Chung Ling (0.06%). 

The acquisitions were completed via direct business transactions today. Prior to that, MIE did not hold any SEB shares. MIE’s largest shareholder is Datuk Tengku Mahamad Tengku Mahamut with a 35% stake, followed by CTCI Malaysia Sdn Bhd at 28%, Innovest Investment Corp at 21% and Datuk Khoo Chee Hong at 16%. 

As MIE now holds more than 33% of SEB, it is obliged to extend an unconditional mandatory takeover offer to acquire all the remaining 24.13 million SEB shares it does not hold, representing 30.28% of SEB’s total outstanding shares, at 50 sen apiece. 

The offer price is a premium of 15.2% to SEB’s five-day volume-weighted average price of 43.4 sen, according to the offer notice sent by UOB Kay Hian Securities (M) Sdn Bhd on behalf of MIE. 

MIE intends to maintain SEB’s listing status on the Main Market of Bursa Malaysia. 

Separately, STC said it sold its stake in SEB, as the group thought SEB’s business would remain challenging. “As such, the disposal represents an opportunity for STC to monetise its investment in SEB at a reasonable price and exit from the loss-making company,” it said in another filing, adding proceeds from the sale will also strengthen its finances.

It plans to use RM11 million from the sale proceeds for working capital, and RM14.8 million for future potential investments, with the remainder to pay estimated expenses relating to the disposal.

“Following the completion of the disposal, STC will re-divert its resources to focus on the growth of its transformer and industrial lighting businesses,” STC added. 

SEB shares closed four sen or 9.88% higher at 44.5 sen today, valuing the company at RM35.60 million. STC, meanwhile, closed six sen or 6.38% lower at 88 sen, giving it a market capitalisation of RM219.14 million.