This article first appeared in The Edge Financial Daily on November 5, 2019

KUALA LUMPUR: Minority shareholders of Kumpulan Powernet Bhd have been advised to accept the takeover offer by Serba Dinamik Holdings Bhd group managing director and chief executive officer Datuk Dr Mohd Abdul Karim Abdullah.

In its independent advice circular to Powernet’s shareholders yesterday, Mercury Securities Sdn Bhd said the offer at RM1 per share is “fair” as the price is higher than the estimated value of the shares, the independent adviser said.

Based on the revalued net asset value methodology, Mercury Securities has derived an estimated fair value in the group of RM30.1 million, this translates into 40 sen per share, and the offer price of RM1 represents a premium of 150% over the estimated fair value.

Mercury Securities said the offer is also “reasonable” as it provides an opportunity for shareholders to realise their investment in Powernet in the immediate term.

Save for the period from July 3, 2017 to July 13, 2017 and from Oct 22 up to the latest practicable date (LPD), the shares have never traded above the offer price for the past three years before the commencement of the offer period and up to the LPD, it noted.

The offer price represents a premium of 8.7% over the last traded market price of Powernet’s shares on the last trading day (LTD); and premiums between 9.9% and 28.2% over the five-day, one-month, three-month, six-month and one year volume-weighted average prices (VWAPs) of the shares up to the LTD.

The offer price, however, represent discounts of 13.8% and 9.1% over the last traded market price of Powernet’s shares on the LPD and the five-day VWAP of its shares up to the LPD respectively.

Notwithstanding that, Powernet’s shares have been trading above the offer price since Oct 22 up to the LPD.

However, only 10.8 million shares were traded during that period vis-à-vis the 47.39 million offer shares as at the LPD.

“Therefore, there can be no assurance that all holders are able to dispose their offer shares at a price higher than the offer price in the open market,” said the independent adviser, adding that there can also be no assurance that the market price of the shares will continue to trade at the current price levels after the closing date of the offer period.

The offeror intends to maintain the listing status of the company on the Main Market of Bursa Malaysia.