This article first appeared in The Edge Malaysia Weekly on June 24, 2024 - June 30, 2024
In less than three weeks, the offer by Oversea-Chinese Banking Corp Ltd (OCBC) to privatise Great Eastern Holdings Ltd will lapse, unless there is another extension.
So far, OCBC has an acceptance level of 89.5%, which is marginally higher from its starting point of 88.4%, when it made the offer to privatise Great Eastern at S$25.60 per share on May 10.
The first cut-off is on June 28 but the offerors have extended the deadline to July 12.
The minorities of Great Eastern are seeking a higher price, which is a given. The independent advisers estimated the fair value of Great Eastern to be between S$28.87 and S$36.17.
Whether OCBC’s privatisation succeeds very much depends on two entities linked to Lee Thor Seng, who is related to the Lee family of OCBC.
He is the major shareholder of Nyalas Rubber Estates Ltd, which indirectly controls Sungei Bagan Rubber Co (M) Bhd (KL:SBAGAN).
Nyalas Rubber has four million shares in Great Eastern while Sungei Bagan has 4.8 million shares.
Sungei Bagan’s interest in Great Eastern increased following the acquisition of assets and liabilities from Kuchai Development Bhd (KL:KUCHAI) for RM275.5 million on May 7. The most valuable part of Kuchai’s assets is the 3.03 million shares in Great Eastern. Two days after Kuchai and Sungei Bagan shareholders approved the deal, OCBC made the offer for Great Eastern.
With less than three weeks to go, Sungei Bagan still has not completed the transaction with Kuchai, which means technically the Great Eastern shares are still with Kuchai. There is no indication as to when the transaction will be completed even though all conditions precedent have been met.
Assuming the Sungei Bagan-Kuchai deal is done before July 12, the next question that arises is whether Sungei Bagan can accept the OCBC offer without shareholders’ approval. This is because the Great Eastern shares make up a substantial portion of Sungei Bagan’s assets.
Or will Sungei Bagan accept the offer and get it ratified later?
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