KUALA LUMPUR (Jan 14): The unconditional mandatory takeover offer on TA Enterprise Bhd (TAE) by major shareholder Datuk Tony Tiah Thee Kian is viewed as unfair, but reasonable, and shareholders urged to accept the offer.

In an independent advice circular posted on Bursa Malaysia’s website today, independent advisor DWA Advisory Sdn Bhd said the 65.5 sen offer price for the shares that Tiah does not own (through TA Securities Holdings Bhd) constituted a discount of RM1.60 to RM1.61 or 71.11% to 71.24% to the estimated value of TAE shares, which are between RM2.25 and RM2.26 per share based on a sum of parts valuation.

That said, DWA noted that the offer represents a premium of 21.30% to the last traded market price of TAE shares as at Feb 11, 2020, and premium of 3.15% to 20.45% over its five-day, one-month, three-month, six-month and 12-month volume-weighted average price (VWAP) up to and including Feb 11, 2020.

DWA also highlighted that the offer is at a 1.55% premium over the last traded market price of TAE as of Dec 11, 2020, and a premium of 1.38% to 16.11% over its five-day, one-month, three-month, six-month and 12-month volume-weighted average price (VWAP) up to and including Dec 11, 2020.

At the same time, the offer is at a 0.77% premium over TAE’s last traded market price as of Dec 28, 2020, and five-day VWAP of TAE shares up to and including Dec 28, 2020.

It was also noted that the historical trading volume of TAE shares is deemed too illiquid when compared against Bursa Malaysia’s Financial Index, as the average monthly volume of TAE shares over free float shares is 2.52%, compared to the Financial Index’s percentage of 7.24%.

“Hence, the holders (especially those with large blocks of offer shares) may have limited opportunities or require a longer time for them to dispose of their offer shares in the open market after the closing date,” it noted.

Given that TAE would cease to be listed on Bursa Malaysia as a result of the offer, and the lack of competing offers to rate offer shares, as well as the fact that as at Jan 8, 2021, Tiah and parties acting in concert (PACs) controlled 77.75% of the TAE’s share capital — the offer is deemed to be reasonable.

As such, the non-interested directors of the company and DWA are recommending for shareholders in TAE to accept the offer.

TAE received a notice of the unconditional mandatory takeover offer from Tiah and the PACs on Dec 14, 2020 after they triggered the creeping threshold, whereby their collective shareholdings in TAE increased from 42.36% to 59.78%. 

Tiah’s interest in TAE rose following the takeover of TA Global Bhd by the stockbroking firm via cash and a share exchange. 

The first closing date for the offer for TAE shares is Jan 25.

Shares in TAE were trading 0.78% or half a sen higher at 65 sen at 4:20pm, translating into a market value of RM1.62 billion.