Sunday 19 May 2024
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KUALA LUMPUR (Feb 19): A takeover offer for Rexit Bhd, which services the financial services industry, by its substantial shareholders is "not fair" and "not reasonable”, said appointed independent adviser MainStreet Advisers Sdn Bhd.

Shareholders should reject the offer, MainStreet concluded in a circular posted to Bursa Malaysia on Monday. The offer price of 85 sen per share is a discount to Rexit’s estimated valuations while the joint offerors also intend to maintain the listing status, the firm noted.

“We are of the opinion that the offer is not fair and not reasonable,” MainStreet said. “Accordingly, we recommend that shareholders reject the offer.”

On Feb 17, Datuk Seow Gim Shen, Metaco Assets Holdings Sdn Bhd, and Bemas Holdings Sdn Bhd extended a formal unconditional mandatory takeover offer to acquire all the remaining ordinary shares in Rexit at 85 sen per share.

The offer came after the three parties emerged as new substantial shareholders of Rexit on Jan 17, acquiring an aggregate of 92.27 million shares or a 53.27% stake in the group for a total cash consideration of RM78.43 million.

The offer price of 85 sen represents a discount of between 2.8 sen and 8.4 sen, or about 3.19% to 8.99%, to the estimated value per Rexit share ranging from 87.8 sen to 93.4 sen based on discounted cash flow, according to MainStreet.

Further, the offer price is also at a discount ranging from 1.85 sen to seven sen, equivalent to 2.13% to 7.61%, to the last transacted market price of Rexit shares as of the last trading day.

The joint offerors are seeking to maintain the listing status of Rexit on the ACE Market of Bursa Securities and do not plan to invoke the provisions of Subsection 222(1) of the Capital Markets and Services Act 2007.

While Rexit shares are “relatively illiquid”, shareholders will still be able to trade Rexit shares even after the closing date and “will have the opportunity to realise their investment in Rexit shares in the open market”, MainStreet added.

Rexit, listed on Bursa Malaysia’s ACE Market in 2005, mainly provides software to the insurance and financial services industries. It offers various IT and related services, including back-end processing, online transaction systems and workflow integration.

Between the financial years ended June 30, 2020 (FY2020) and FY2023, Rexit’s profit climbed steadily from about RM9.52 million to about RM11.1 million, generated from annual revenues of between RM25.06 million and RM26.74 million. Over the same period, its net margins ranged between 36% and 42%.

At the midday break on Monday, shares in Rexit were half a sen or 0.57% higher at 88.5 sen, giving the group a market capitalisation of RM167.56 million.

Edited ByJason Ng
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