(This article has been updated.)
KUALA LUMPUR (June 2): The Securities Commission (SC) has rejected TA Enterprise Bhd's (TAE) application to withdraw its voluntary takeover offer (VTO) to buy the remaining 39.83% stake it does not own in TA Global Bhd — a move to take the property arm private.
In a filing to Bursa Malaysia, TAE said the SC had, vide its letter dated June 1, resolved to decline the application for the withdrawal after having considered the justifications provided on a holistic basis.
This means that TAE will have to carry on with the VTO at 28 sen per share. Nonetheless, uncertainty remains on the privatisation deal.
The board of TAE needs to seek shareholders’ approval for the proposal. The ball is now in minority shareholders of TAE’s court. Given the adverse impact of the Covid-19 pandemic, will TAE’s minorities grant the greenlight to wholly own TA Global, whose hotel business has been hit hard?
To recap, TAE on May 6 submitted an application to the SC for its approval to abort the privatisation exercise, in which Datuk Tony Tiah would pump fresh money into TAE to finance the deal.
Tiah, the co-founder and controlling shareholder of the two listed companies, and his parties acting in concert collectively hold a 42.37% stake in TAE and 15.34% in TA Global. Meanwhile, TAE controls a 60.17% stake in TA Global.
TAE decided to withdraw the proposal three months after the takeover bid was made to TA Global. The stockbroking group cited the adverse impact of the Covid-19 pandemic as the main reason to abort the plan.
Under the proposal, TA Global shareholders are given the choice of either a cash offer of 28 sen per existing share held, or a share swap based on an exchange ratio of 0.4211 new ordinary share in TAE to be issued at 66.5 sen each for every TA Global share surrendered.
The offer price of 28 sen is 20.85% above TA Global's five-day volume weighted average market price in February. The issue price of TAE shares at 66.5 sen also represents a 22.29% premium then.
The offer price of 28 sen is at 33% premium, or seven sen, over TA Global's last traded price of 21 sen. Interestingly, TAE’s last traded price is 50 sen, which is nearly 25% lower than the issue price of 66.5 sen.