‘OldTown takeover bid good for investors’

Proposal of RM3.18 per share higher than analysts’ estimated value

DUTCH company Jacobs Douwe Egberts BV’s (JDE) RM1.47 billion offer to take over OldTown Bhd represents good value for investors, said analysts.

The offer price of RM3.18 per share is higher than analysts’ estimated value for OldTown shares. With the offer price at 10.41 per cent premium over OldTown’s last traded price of RM2.88 on Friday, analysts said that the offer is fair and reasonable.

Hong Leong Investment Bank said the offer price is 18.6 times of its estimated earnings per share for OldTown’s 2019 financial year.

“The offer price is nine per cent above its estimated fair value of RM2.91 per share. We advise minorities to accept the offer made by JDE,” it said.

AllianceDBS Research said the offer price is reasonable and fair as RM3.18 is in line with its RM3.15 target price.

The firm maintained its “buy” call on OldTown and urged investors to accept the offer once the preconditions are met.

OldTown surged more than seven per cent in early trade yesterday on the takeover news.

At mid-afternoon, the stock stood at RM3.09, up 21 sen, or 7.29 per cent, with 2.89 million units changing hands.

The stock hit an intra-day high of RM3.17 and closed the day at 6.94 per cent higher to RM3.08, with 3.73 million shares traded.

OldTown had announced on Monday it received a pre-conditional cash offer for all the issued ordinary shares of the company from Jacobs Douwe Egberts Holdings Asia NL BV, an indirect wholly-owned subsidiary of JDE.

The offer will be subject to the preconditions of green lights obtained from the Competition Commission of Singapore, without conditions or on conditions reasonably satisfactory to JDE, and the offer does not violate any other appropriate anti-trust authorisations.

The offer will not be made to shareholders of OldTown until the preconditions highlighted above have been satisfied, latest by August 11 next year.

JDE intends to privatise OldTown and will not maintain its listing status on Bursa Malaysia.