KUALA LUMPUR (June 2): Any announcement of a firm offer should be made only after careful and responsible consideration, the Securities Commission (SC) said today in rejecting TA Enterprise Bhd’s (TAE) application to withdraw its takeover offer for TA Global Bhd shares.
The SC said it decided not to approve the withdrawal application after taking into consideration several factors, including the justifications provided by the applicant and precedents from other jurisdictions.
The exchange regulator said it also looked at the conduct of the applicant from the time of the announcement of the offer up to the date of the application to the SC.
"Any announcement of a firm offer should be made only after careful and responsible consideration, as once the announcement on the offer is made, the market in the shares of the relevant company is likely to be supported by the offer price.
"Hence, an offeror or any person who proposes to make an acquisition which may lead to an obligation to make a take-over offer, must ensure that he is able to implement the offer in full," SC said.
In a move to take TA Global private, TAE had proposed to buy the remaining 39.83% stake it does not own in the property firm via two options, including a cash offer of 28 sen per share held.
The second option was a share swap based on an exchange ratio of 0.4211 new share in TAE to be issued at 66.5 sen each for every TA Global share surrendered.
The stockbroking group decided to withdraw the proposal three months after the takeover bid was made to TA Global, citing the adverse impact of the Covid-19 pandemic as the main reason.
Given that the offer was announced at a time when Covid-19 was already known, the SC said TAE and its board should have taken into consideration the risks before making the announcement since they would be in a position to evaluate the prospects of TA Global’s business.
"The letter and spirit of the Malaysian Code on Take-overs and Mergers 2016 (Code) and the Rules on Take-overs, Mergers and Compulsory Acquisition (Rules) seek to provide an orderly framework within which take-overs and mergers are conducted.
"The regulatory framework are primarily designed to ensure that shareholders are treated fairly, given the opportunity to decide on the merits of a take-over and afforded equal treatment by an offeror," the commission added.
With TAE's voluntary takeover offer withdrawal application rejected, the group's non-interested shareholders will get to decide whether to vote for or against TAE’s proposal at an extraordinary general meeting.