Yee Lee’s second attempt

IT is not unusual for major shareholders to fail in their attempt to take a company private in the first attempt. If they do not succeed, they would make another attempt – with a higher price.

However, the exception seems to be Ipohbased Yee Lee Corp Bhd, the edible oils producer and distributor.

Just about a year ago in April 2019, the company together with a Singapore-based fund made a general offer to take Yee Lee private at RM2.33 per share.

Yee Lee owns 30.27% of Spritzer Bhd, the mineral water producer and distributor.

The distribution network of edible oil and mineral water was a venture any private company would want to have a stake in.

It offers a distribution network that runs wide and to every nook and corner of the country.

At the launch of the offer, the major shareholders of Yee Lee already had 47.9%.

To take the company private, they needed to get the acceptance of the 90% of the remaining shares they do not own.

Yee Lee together with the private fund, Langit Makmur Sdn Bhd, ended up with 89.94% of the company, falling short of the 90% threshold.

If the acceptance had touched 90%, Yee Lee would have been suspended for not fulfilling the public spread and the remaining shareholders would most probably have given up.

Earlier this week, another attempt was launched to take the company private.

The major shareholders together with Langit Makmur, made an offer for RM2.06 per share for the remaining 10.06% it did not own. What’s puzzling is that the offer is lower than the earlier offer of RM2.33.

A day after the offer on May 12, the company received acceptances to the level of 90.08%. In the next few weeks, in all probability, the remaining shareholders would accept the offer of RM2.06 sen per share.

This is probably one of the few times when the major shareholder gets a bigger hold of the company by offering a lower price than their previous privatisation attempt.

The question is why were the remaining shareholders, holding the 10.06% block, holding out for so long?

And would they accept the latest offer which is lower than the previous offer?