KUALA LUMPUR (Sept 7): Minority shareholders at MKH Bhd (KL:MKH) and its plantation unit MKH Oil Palm Bhd (KL:MKHOP) have been given contrasting recommendations on the takeover offers from Batu Kawan Bhd (KL:BKAWAN): accept the buyout of the parent company, but reject the offer for its listed plantation arm.

On the RM2 per share offer for MKH, independent adviser Kenanga Investment Bank said the offer is not fair as the takeover undervalues the property developer’s estimated worth of RM4.31 per share. MKH's latest unaudited net assets stood at RM3.27 per share as at June 30.

The offer, however, is reasonable as MKH shares are illiquid and there are no alternatives on the table, Kenanga IB said in its independent advice circular issued on Monday.

Batu Kawan and its connected parties collectively also hold about 59% in MKH, limiting the prospect of a successful competing offer. Further, a failure in the deal could result in its stock price reverting towards historical levels, Kenanga IB noted.

MKH’s business outlook also appears dim; “in light of the prevailing soft condition in the property sector, characterised by supply-demand imbalances, rising construction costs and uncertain recovery trajectory, the prospects of MKH for near and medium term appear to be limited,” the investment bank added.

Shares of MKH have surged to a nine-year high and crossed the billion-ringgit valuation mark after Batu Kawan bought 47.7% stake from the Chen family for RM549.8 million. The deal triggered a mandatory general offer for the remaining MKH shares at RM2 each.

Batu Kawan said it intends to take MKH private if it secures at least a 90% stake in the company. The proposed acquisition was approved by Batu Kawan shareholders on Aug 5 and the relevant agreement turned unconditional on Aug 6.

Meanwhile, shareholders of MKH's plantation arm, MKHOP, have been told to reject the related takeover offer of 66.26 sen per share from Batu Kawan, according to the separately appointed MainStreet Advisers Sdn Bhd.

The offer is both “not fair and not reasonable”, MainStreet said, noting that the offer price values MKH Oil Palm at 47% below its net realisable asset value of RM1.26 per share as at June 30.

Further, MKH Oil Palm will remain tradeable on Bursa Malaysia and Batu Kawan has already stated its intention to maintain its listing status, allowing shareholders to realise their investments after the closing date, MainStreet noted.

Shareholders of MKH Oil Palm are recommended to reject the offer, the adviser concluded.

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