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KUALA LUMPUR (Jan 11): JAG Capital Holdings Bhd’s mandatory general offer (MGO) for KUB Malaysia Bhd is not due to any valuation issues, according to Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani.
JAG is controlled by Johari, who is a shareholder with a 98.75% stake.
On Tuesday (Jan 9), JAG raised its stake in KUB to above the 33% threshold, triggering the MGO. JAG said it does not intend to keep KUB’s listing status should it secure 90% of all KUB shares.
“We announced earlier to buy over Central Cables Bhd (CCB). Because of the share issuance, we triggered the GO (general offer), so I have to do the GO. I can’t cancel the deal. So we have to proceed. The advisers say we have to do the acquisition and GO concurrently,” he said on the sidelines of the Malaysian Palm Oil Board (MPOB) Palm Oil Economic Review and Outlook Seminar 2024.
He also stressed that the corporate exercise had been announced prior to his appointment as minister.
“We have to be fair to the shareholders because they know the impact on the deal before my appointment [as the Plantation and Commodities Minister], so we have to proceed with the exercise. Nothing more than that,” he added.
Last November, KUB proposed to acquire an 86.65% equity interest in CCB from JAG Capital to venture into the power cable manufacturing business, for a purchase sum of RM119.42 million, to be satisfied via the issuance of 199.04 million new shares in KUB at 60 sen per share.
Upon completion of the acquisition, KUB would extend an MGO to acquire all of the remaining CCB shares at RM2.60 per share to be satisfied either wholly in cash amounting up to RM18.4 million in total or via the issuance of new shares in KUB, also at an issue price of 60 sen per share.
However, on Jan 9, KUB announced that the acquisition of CCB would be done via the issuance of redeemable convertible preference shares (RCPS) to JAG Capital. These RCPS can be converted into new ordinary KUB shares on a one-for-one basis.
KUB’s net profit for the first quarter ended Sept 30, 2023 (1QFY2024) surged 96.3% to RM7.35 million from RM3.74 million a year ago, largely driven by the encouraging performance from the liquefied petroleum gas division and a gain from disposal of assets of RM2.8 million.
At 3.15pm, shares in KUB were trading one sen or 1.7% higher at 59.5 sen, giving it a market capitalisation of RM331.1 million. In the past one year, the counter is up 11.3%.