KUALA LUMPUR (April 2): The privatisation of DKSH Holdings (Malaysia) Bhd (KL:DKSH) (DKSH Malaysia) fell through after minority shareholders voted to decline the buyout offer on Thursday.
Singapore-based fund manager Pangolin Investment Management Pte Ltd was among the 100 shareholders representing two-thirds of the votes who rejected the proposal worth RM6.15 per share from Switzerland-based DKSH Holding Ltd at the extraordinary general meeting.
Only 51 out of a total of 151 shareholders voted in favour of the offer. By share value, 87.47% voted against the proposal, while 12.53% voted in favour.
Following the rejection, DKSH Malaysia will remain listed on Bursa Malaysia’s Main Market.
Any potential reconsideration of the selective capital reduction would be subject to compliance with applicable laws and regulations, including any prescribed cooling-off period, a spokesperson representing the company told The Edge.
“There are no changes to operations, and it remains business as usual for DKSH Malaysia,” the spokesperson added.
DKSH came to Malaysia in 1923 before its independence and has been listed since 1994. Today, the company distributes products in consumer goods, healthcare, materials and technology for Fortune 500 companies. However, the stock is usually little traded on Bursa Malaysia.
Low offer
The deal requires approval by at least a majority in number of minority shareholders and 75% in value of the voting shares, and that no more than 10% of the voting shares held by minority shareholders are against it.
Pangolin Investment founder and director James Hay said the offer is too low as he believes the stock is worth significantly more than the proposed price. Pangolin, through its long-term value fund Pangolin Asia Fund, holds 2.71% of DKSH Malaysia.
“We intend to hold the company for the long term,” he told The Edge. “Everybody in the room knows that they are holding an illiquid company, but they have a very good investment that was bought cheaply.”
For the Minority Shareholders Watch Group, the issue goes beyond the low offer price and into the process itself.
DKSH Malaysia’s board was likely aware of the voting stance of key minority shareholders, including Pangolin Investment, ahead of the vote given that their opposition had been publicly reported by The Edge, said chief executive officer Dr Ismet Yusoff.
“There should have been some mechanism to manage this, rather than going through the process,” he said. “It could have been handled through engagement or reconsideration with the offeror, to relay these concerns and further discuss whether a better offer price could be put on the table.”
At Thursday’s noon break, shares of DKSH Malaysia slipped two sen or 0.34% at RM5.78, giving it a market capitalisation of RM911.26 million. The counter has risen over 16% in the last 12 months.