This article first appeared in The Edge Malaysia Weekly on January 28, 2019 - February 3, 2019

IN May 2014, Datuk Anthony See Teow Guan, then an executive director of Kian Joo Can Factory Bhd (KJCF), said his long-standing feud with his brother, Datuk See Teow Chuan, was over. “We are talking to each other and working together. All our past troubles are history,” he said then.

Nevertheless, the brothers patching up and joining forces did not prevent them from losing control of KJCF, which their late father, See Boon Tay, started in 1956.

Today, Teow Chuan — who has an 8.95% stake in KJCF, according to the company’s annual report for the financial year ended Dec 31, 2017 (FY2017) — is the only family member with a substantial stake. Anthony has only 1.56% while other members of the family have about 1.61%, in contrast to Can-One Bhd — which is controlled by businessman Yeoh Jin Hoe — which owns 33.59% equity interest.

In a nutshell, the feud between Teow Chuan and his younger brother Anthony cost the family dearly, losing control of KJCF, a company with a market capitalisation exceeding RM1.2 billion and a 55% stake in Box-Pak (M) Bhd, a firm with a market value of RM120 million.

What happened 

There are many stories about what led to the fight between Teow Chuan and Anthony, but nothing is conclusive. Some even say the kidnap of one of them was the reason for the feud, as the other did not respond the way a loving brother is expected to.

What is clear is that around 1994, the brothers — after much fighting — settled for a plan to liquidate Kian Joo Holdings Sdn Bhd (Kian Joo) and distribute its 34.64% stake in KJCF to 27 shareholders.

However, the mode of distribution became an issue.

Anthony’s faction — which controlled 45% of Kian Joo — sought the liquidation via the distribution of Kian Joo’s KJCF shares to family members while Teow Chuan’s faction — which had 55% of Kian Joo — preferred a sale for cash and the proceeds distributed to family members in proportion to their holdings in the family vehicle, Kian Joo.

After much legal wrangling, the courts favoured Teow Chuan’s view and opted for liquidation by way of disposal of the KJCF stake. Anthony’s group filed an application seeking the courts to direct liquidator KPMG to distribute the 45% in Kian Joo among the family members and restrain KPMG from disposing of the 55% in KJCF, but the courts held firm and dismissed the application in 2003.

Anthony and those supporting him continued to appeal, but to no avail. In June 2007, KPMG placed an advertisement in newspapers soliciting bids for Kian Joo’s controlling block, which was just shy of 35% of KJCF.

Letting go of KJCF

Anthony’s camp, clutching at straws, applied to the courts to stop the disposal, but the application was dismissed.

To cut a long story short, four bidders were shortlisted, with Teow Chuan putting in the highest bid at RM2.08 per share, and Can-One offering only RM1.65. The other two parties (both unknown) had bids of RM1.80 and RM1.60.

However, with the effects of the global financial crisis in 2007, KJCF’s share price plummeted to about RM1.40, making financing for the acquisition difficult to obtain.

In a tender exercise in February 2009, three bidders were shortlisted — Can-One with a RM1.55 per share bid, Teow Chuan with RM1.51 and an unknown party with RM1.20. Anthony, meanwhile, opted out of the bid, deterred by poor market conditions.

KPMG sought higher bids from the three as KJCF’s net tangible asset per share was RM1.56. Can-One upped the ante, offering RM1.65 per share or RM241.1 million cash while Teow Chuan did not raise his offer.

On Jan 31, 2012, an announcement to the stock exchange had it that Can-One had emerged as a controlling shareholder in KJCF with a 32.9% stake and Kian Joo ceased to be a substantial shareholder.

According to sources familiar with the brothers, both were sore as they had lost. Teow Chuan, who was already above 70 then, was appointed to the board of Kian Joo in 1966 and was the managing director of KJCF until Jan 5, 2012. Anthony, meanwhile, sold his block of shares at a price perceived to be very low by the investing community.

So, it came as no surprise that Teow Chuan’s group and even other family members filed several claims, including some against the liquidator and Can-One International Sdn Bhd, the wholly-owned unit of Can-One that won the bidding, alleging that there were fraudulent practices in the award, and claimed damages of RM55 million, with an annual interest cost of 8%, but to no avail.

There have been many issues between the many factions since.

In November 2013, KJCF attempted to sell its entire business to Aspire Insight Sdn Bhd for RM1.46 billion or RM3.30 a share, ahead of a rival offer of RM3.74 a share by Japan’s Toyota Tsusho Corp.

Aspire was a joint-venture company owned by Ekuiti Merdu Sdn Bhd (40% equity interest) and Alleyways Sdn Bhd (60%). Ekuiti Merdu was a unit of the Employees Provident Fund while Alleyways was owned by KJCF chief operating officer and executive director Freddie Chee Khay Leong and Aileen Shireena Naidu.

Members of the See family pounced on even this attempted sale, saying that Chee and Yeoh, Can-One’s managing director, were acting in concert, but the deal fell through due to pricing issues.

Nevertheless, after several years and many attempts, KJCF seems to be out of the grasp of the See family, and more and more entrenched with Can-One.

The feud seems to have cost the family members dearly.

No general offer for Box-Pak

It was announced recently that Can-One Bhd’s board has proposed a general offer (GO) at RM3.10 per share to privatise Kian Joo Can Factory Bhd (KJCF), which, in turn, owns a 55% stake in Box-Pak (M) Bhd.

But the GO will not trigger a downstream takeover of Box-Pak, meaning that Can-One is not required to acquire the remaining Box-Pak shares it does not own after it has taken KJCF private.

The Edge understands that because Box-Pak’s contribution to KJCF is not significant, Can-One need not launch a separate GO for Box-Pak.

According to KJCF’s annual report for the financial year ended Dec 31, 2017 (FY2017), the group’s can business generated RM1.23 billion (aluminium cans: RM613.38 million; and tin cans: RM620.08 million), compared with its carton division’s (Box-Pak) RM552.75 million.

Interestingly, it was a rather different scenario some five years ago when the Employees Provident Fund (EPF) set up a special purpose vehicle — Aspire Insight Sdn Bhd — to take over the assets and liabilities of KJCF at RM3.30 per share or RM1.46 billion in total. It was also required to launch a general offer for Box-Pak.

Aspire Insight was 40%-owned by the EPF and 60% by Alleyways Sdn Bhd, whose major shareholder was Freddie Chee Khay Leong, chief operating officer and executive director of KJCF and former chief operating officer of Can-One.

However, the deal fell through because the See family rejected the offer, and the rest, as they say, is history. Can-One is KJCF’s parent, controlling a 32.9% stake in the company.

Back to the present, judging by Box-Pak’s lacklustre share performance, it is safe to say that the investing fraternity does not expect a GO for the company.

The stock hit its 52-week low of 86.5 sen on Nov 7 last year. Since then, it has gained almost 15% to close at RM1 last Friday on razor-thin trading volume.

In contrast, Box-Pak’s 52-week high of RM1.32 was a year ago on Jan 25.

Apart from KJCF holding a 55% stake, other substantial shareholders in Box-Pak are Chua Sim Neo @ Diana Chua and Pui Cheng Wui (both holding 5% equity interest each). It is also worth noting that Box-Pak’s top 30 shareholders own 89.09% of its 120 million shares, which makes it an illiquid stock.

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