KUALA LUMPUR (June 22): Japan’s Ajinomoto Co Inc will be taking its Malaysia-listed unit private at RM20 per share — a 31.6% premium over the last traded price of RM15.20.
According to Ajinomoto (Malaysia) Bhd’s (KL:AJI) bourse filing, the privatisation exercise, which is valued at RM603.4 million, will be carried out via a selective capital repayment exercise.
As at March 31, Ajinomoto Malaysia’s cash position stood at RM74 million, equivalent to RM1.23 per share. The Japanese controlling shareholder is expected to inject more than RM500 million based on a preliminary back-of-the-envelope estimate.
Ajinomoto Malaysia said in the announcement that the exercise will be funded through the company’s excess funds, with the remaining amount to be financed by its parent company. The breakdown was not disclosed.
The board of Ajinomoto Malaysia, excluding directors with a conflict of interest, will deliberate on the proposal and decide on the next course of action. If successful, Ajinomoto Co does not intend to maintain the listing of Ajinomoto Malaysia — which is primarily known for food seasonings, particularly monosodium glutamate (MSG) — on Bursa Malaysia.
Ajinomoto Co, which owns 50.38% or 30.63 million shares in Ajinomoto Malaysia, said it will undertake a selective capital reduction and repayment exercise involving the 30.17 million shares, or 49.62% stake, that it does not own.
In total, the group will pay RM603.4 million, RM20 per share, under the selective capital reduction to cancel the 30.17 million shares. Ajinomoto Malaysia had an issued share capital of RM65.1 million comprising 60.8 million shares as at Monday, June 22.
As at end-March, the group had cash and bank balances of RM74.24 million and liquid investments of about RM273.5 million. Its retained earnings stood at about RM805 million, against total equity of RM867.6 million. The group has no material borrowings, apart from lease liabilities of about RM5.16 million.
Trading in the stock will resume at 9am on Tuesday.
To facilitate the transaction, Ajinomoto Malaysia will first issue 571.1 million bonus shares as the proposed repayment exceeds its existing share capital. However, the shares will not be credited to shareholders or listed.
The next step involves a selective capital reduction, under which all shares held by minority shareholders together with the bonus shares will be cancelled.
Apart from the gains in premium, the proposal also provides an exit opportunity for shareholders given Ajinomoto Malaysia's historically low liquidity, the offeror said, noting that the average daily trading volume accounted for only about 0.13% of its free float.
Further, Ajinomoto Malaysia derives minimal benefit from its listing status since the company has not raised funds from the capital market for over a decade while continuing to incur listing-related costs.
The proposal requires approval of at least 75% of votes cast by independent shareholders, with dissenting votes not exceeding 10%, as well as other customary approvals.