KUALA LUMPUR (Dec 9): Distributor of Fortune 500 companies’ consumer goods, healthcare, materials, and technology DKSH Holdings (Malaysia) Bhd (KL:DKSH) said its controlling shareholder, DKSH Resources (Malaysia) Sdn Bhd, plans to take the company private through a RM249.1 million, or RM6.15 a share, selective capital reduction and repayment (SCR) exercise.

DKSH Resources currently owns 74.3% of the company. 

In a filing with Bursa Malaysia on Tuesday, the company said under the plan, shareholders will receive RM6.15 per share, a 16.7% premium to Monday’s closing price of RM5.27, and a 24% premium to its prevailing 12-month volume-weighted average price of RM4.96.

The SCR covers 40.5 million shares, or 25.7% of the company’s issued share capital.

DKSH Resources said because the repayment exceeds the company’s paid-up capital, it proposed DKSH Holdings issue about 58 million bonus shares from retained earnings, to raise the share capital to a level which allows the reduction in capital for the SCR. DKSH Resources did not disclose the number of bonus shares per shareholder.

According to DKSH Resources, the payout will be funded via internal cash, borrowings, and an advance from DKSH Resources. As at end-September, the group held RM50.9 million in cash and bank balances, against total borrowings of RM536.6 million.

After the exercise, DKSH Resources does not plan to keep the company listed.

Explaining the rationale, DKSH Resources said the SCR provides shareholders a timely opportunity to exit at a premium, citing persistently low trading liquidity and a more volatile operating environment.

DKSH Holdings shares have historically been thinly traded, with an average daily volume of just 48,492 shares over the past three years — only 0.12% of its 40.4 million-share free float.

“This presents entitled shareholders with a good and expedient opportunity to realise their investments at a premium, especially at a time marked by geopolitical uncertainties and macroeconomic headwinds,” DKSH Resources said.

The major shareholder also pointed to heightened global risks and weaker business visibility ahead.

The proposal is now up for deliberation by the company’s board of directors.

Trading in DKSH Holdings was suspended for the whole day on Tuesday pending the announcement. The stock last traded at RM5.27 a share, valuing the company at RM830.9 million. Trading will resume on Wednesday. Year to date, the counter has edged up 5.4%