KUALA LUMPUR (July 14): Independent adviser cfSolutions has advised minority shareholders of Rex Industry Bhd (KL:REX) to reject the conditional mandatory takeover offer by controlling shareholder ETA Industries. The offer is 10 sen per share and 0.5 sen per warrant but cfSolutions says it’s “not fair and not reasonable”.
ETA Industries and its partners now own 52.22% of Rex’s shares and 39.18% of its warrants. ETA Industries’ CEO Lim Chin Hui is the ultimate offeror in the transaction.
In explaining its "not fair" conclusion, cfSolutions said the offer price matches Rex’s last traded price and is slightly higher than recent averages but it is still 37.5% below the estimated share value of 16 sen. The warrant offer is also much lower — 83.3% below its estimated value.
In explaining its "not reasonable" finding, the independent adviser said the offeror plans to keep Rex listed on Bursa Malaysia, so shareholders can still trade their shares and warrants after the offer ends. However, trading may stay limited because the stock has low activity historically.
Rex, which makes and sells canned food, beverages, and premix products, is part of Bursa Malaysia’s Consumer Products & Services sector. Compared to this sector, Rex’s shares and warrants are less actively traded. From June 2024 to May 2025, Rex's shares had an average monthly trading liquidity of 1.69% and its warrants had 1.15%, both much lower than the sector’s 5.97% average.
cfSolutions also explained that the offerors also do not plan to use their rights under the law to forcefully buy out the remaining shares, even if they reach the required ownership level.
If Rex no longer meets the minimum public shareholding requirement after the offer, the offerors will work with the company to fix the issue. While shareholders can still sell their shares after the offer, there’s no guarantee the price or liquidity will stay the same.
After reviewing the offer and cfSolutions’ advice, the non-interested directors agree that the offer is not fair and not reasonable. They recommend shareholders reject the offer, which is open for acceptance until July 25.
Rex earns about 41% of its revenue from Malaysia and the rest mainly from the Americas. Its factories are in Malaysia and Indonesia.
The company has faced losses in three of the past five years. In the third quarter ending March 31, 2025, Rex had a net loss of RM2.65 million, worse than the RM492,000 the year before. This was due to extra costs for old inventory and bad debts. Revenue also dropped 11.7% to RM31.43 million because of weaker demand in Malaysia.
Rex’s share price closed one sen or 9.52% higher at 11.5 sen on Monday, giving the company a market capitalisation of RM75.6 million.