KUALA LUMPUR (Feb 13): Minority shareholders of Tecnic Group Bhd have been told to reject the mandatory takeover offer at 63 sen per share by Rohas-Euco Holding Sdn Bhd, Tan Sri Nik Awang @ Wan Azmi Wan Hamzah, Puan Sri Nik Anida Nik Manshor, Sia Bun Chun and Chan Liew Hoon.

Independent adviser Mercury Securities Sdn Bhd said the offer is "not fair" and "not reasonable" because the offer price is lower than the value of the offer shares.

Mercury Securities has derived the fair value for the entire equity interest in Tecnic at between RM250.43 million and RM271.77 million, representing 70 sen to 76 sen per Tecnic share based on the discounted cash flow valuation method.

"(Thus,) the offer price of 63 sen represents a discount of 7 sen to 13 sen or 10% to 17.11% to the range of fair values per Tecnic share," it said in an independent advice letter filed with Bursa Malaysia today.

The offer price is also lower than the closing market price of Tecnic Group shares for approximately 95% of the total market days since the announcement date of the memorandum of understanding on Sept 21, 2015 up to the last practicable date on Feb 6, 2017.

Mercury Securities also deemed the offer not reasonable because Tecnic shares will remain tradable on the Main Market of Bursa Malaysia following the acquisition.

"Moreover, the enlarged Tecnic Group will be involved in new core businesses including the fabrication of steel towers for power transmission and telecommunications, thereby allowing the holders the opportunity to participate in the growth prospects of these businesses," it said.

Recall that the mandatory offer was undertaken to comply with Section 218(2) of the Capital Markets and Services Act 2007 following the acquisition by Tecnic Group of the entire equity interest held by Rohas-Euco Holding in Rohas-Euco Industries Bhd (REI), comprising 68.4 million REI shares for a purchase consideration of RM200 million, to be satisfied via the issuance of 317.5 million consideration shares to Wan Azmi, Nik Anida, Sia and Chan at an issue price of 63 sen each, which will result in the increase of the collective shareholdings of the joint offerors in Tecnic Group from nil to 88.71%.

This enables Tecnic Group to acquire a new core business as part of a regularisation plan, and to maintain the listing status on the Main Market of Bursa Securities.

At 3.50pm, Tecnic Group shares slipped by 2.01% to 73 sen, with 85,900 shares traded, giving it a market capitalisation of RM29.9 million.