KUALA LUMPUR: Leong Hup Holdings Bhd and Emivest Bhd have received a takeover offer totalling RM426 million from a major shareholder, Emerging Glory Sdn Bhd, to acquire all their assets and liabilities.

The takeover offer will make both Leong Hup and Emivest cash-rich companies. In separate statements yesterday Emerging Glory said it planned to distribute the cash portion arising from the takeovers to shareholders of both Leong Hup and Emivest via the declaration of a special dividend or the implementation of a capital repayment exercise.

In a filing to Bursa Malaysia, Leong Hup, a poultry and farming breeding firm, said the offer for its assets and liabilities was RM318.65 million or RM1.80 per share, versus its last traded price of RM1.69.

In a separate statement to Bursa, Emivest, which manufactures and markets animal feed and feed additive premix in Malaysia and Vietnam, said Emerging Glory had offered to acquire all assets and liabilities for RM108 million or 90 sen per share, compared with its pre-suspension trading price of 82 sen.

Emerging Glory said in the offer letter to Leong Hup that of the RM318.6 million, about RM169.7 million would be in cash and RM148.9 million will be an amount owed to Leong Hup.

Datuk Lau Bong Wong, Lau Chia Nguang, Datuk Lau Eng Guang, Tan Sri Lau Tuan Nguang and Leong Hup Management Sdn Bhd collectively hold 82.7 million Leong Hup shares or a 46.7% stake.

As for Emivest, Emerging Glory’s offer letter stated that of the purchase consideration of RM108 million, about RM46.35 million would be in cash and the remaining RM61.64 million would be the balance due by Emerging Glory as debt due to Emivest.

Bong Wong, Chia Nguang, Eng Guang, Tuan Nguang and Mega Perfect  (M) Sdn Bhd collectively hold 68.49 million Emivest shares or 57.08% interest.

Upon the sale of the businesses, both Leong Hup and Emivest will fall within the ambit of cash criterion per paragraph 8.03 of the listing requirements and as an affected listed issuer under PN17.

As such, an increase in authorised share capital and the undertaking of a bonus issue from both Leong Hup and Emivest will be expected to facilitate the capital repayment exercise. It is noted in both statements that all bonus shares to be issued shall be cancelled upon issuance.

It is worth noting that Bong Wong is chairman of Leong Hup and also chairman and managing director of Emivest.

Mega Perfect is the single-largest shareholder of Emivest with a 33.07% stake or 39.68 million shares. Leong Hup Management Sdn Bhd holds 47.47% or 79.14 million shares of Leong Hup.

The proposed takeover comes hot on an announcement that industry peer QL Resources Bhd was buying a 23.29% interest in competitor Lay Hong Bhd for RM48.55 million. These corporate exercises suggest the industry is moving into a merger and acquisition trend.

This article appeared in The Edge Financial Daily, November 19, 2010.