Jardine Cycle & Carriage offer ‘not fair but reasonable’

By ASILA JALIL / Pic source jcclgroup.com

SINGAPORE-LISTED Jardine Cycle & Carriage Ltd’s (JCCL) unconditional voluntary takeover offer to acquire all the remaining ordinary shares in Cycle & Carriage Bintang Bhd (CCB) is deemed “not fair but reasonable” by independent advisor Affin Hwang Investment Bank Bhd (Affin Hwang IB).

In a circular filed to Bursa Malaysia yesterday, Affin Hwang IB recommended shareholders to accept the offer though it viewed the proposal as not fair as the offer price of RM2.40 is lower than the estimated realisable net asset value (RNAV) per CCB share by RM1.31.

“Based on the RNAV method, the equity value of CCB is approximately RM373.51 million, which will translate to approximately RM3.71 per CCB share.

“The offer price of RM2.40 is lower than the estimated RNAV per CCB share representing a discount of RM1.31 or 35.31% to the estimated RNAV per CCB share of RM3.71,” it said.

Affin Hwang IB, however, said the current offer price is reasonable as its higher than JCCL’s previous offer of RM2.20 per CCB share. The resolution for the previous offer was not carried through at the EGM held on Feb 11, 2020.

The RM2.40 per offer share represents a 9.09% increase to the previous offer and a lower discount of 35.31% to the RNAV of CCB shares compared to the discount of 39.56% derived under the previous offer made by JCCL. The investment bank noted that CCB shares had consistently traded below the offer price for a year prior to the last trading day dated March 16, 2021, and to a low of RM1.16 of March 23, 2021.

It added that the average monthly traded volume of 713,909 CCB shares for the past year up to March 2021 is approximately 1.73% of the free float of CCB shares.

“The monthly trading volume-to-free-float of CCB shares during the said period had generally been lower than that of Kuala Lumpur Consumer Product Index with a simple average of 14.06%.

“Accordingly, the holders may have difficulties realising their investments immediately in the open market if they choose to do so, taking into account that CCB shares are thinly traded,” it said.

CCB’s non-interested directors concurred with the advisor’s evaluation and recommendation to accept the takeover offer. The first closing date is on April 28.

On Nov 11, 2019, JCCL had offered to buy out minority shareholders of CCB through a proposed selective capital reduction and repayment exercise for RM2.20 per share. It also intends to delist CCB.

The privatisation bid for CCB is a second attempt by JCCL after it failed to privatise the company last year as 13.18% of disinterested shareholders voted against the selective capital reduction exercise.