MP Evans share­hold­ers re­ject KLK’s takeover bid

> An­a­lyst says deal will be a tough one for plan­ta­tion group un­less a higher price is of­fered

The Sun (Malaysia) - - SPEAK UP - BY EE ANN NEE

PETALING JAYA: Kuala Lumpur Ke­pong Bhd’s (KLK) pro­posed takeover of UK-based plan­ta­tion com­pany MP Evans Group PLC looks to be short­lived, with the board of MP Evans stat­ing that its stand to re­ject the deal has been given the un­equiv­o­cal sup­port of 54.72% of its share­hold­ers.

“Share­hold­ers hold­ing a ma­jor­ity of the com­pany’s share cap­i­tal have al­ready, within 24 hours of the of­fer’s an­nounce­ment, con­firmed their in­ten­tion to re­ject the of­fer, sup­port­ing the board’s po­si­tion. The of­fer there­fore can­not suc­ceed and will fail,” MP Evans chair­man Peter Had­s­ley-Chap­lin said in a state­ment.

As at press time KLK had not made an an­nounce­ment on the mat­ter.

PublicIn­vest Re­search an­a­lyst Chong Hoe Leong said it will be tough for KLK, which had of­fered to buy MP Evans at 640 pence per share, to take over the com­pany un­less KLK comes up with a higher of­fer price.

“It’s not con­vinc­ing for the ma­jor share­hold­ers to let go of their shares. In this case, KLK wants to take over and now it faces re­sis­tance un­less it can of­fer a higher price to con­vince them, oth­er­wise it will be tough,” he told Sun­Biz yes­ter­day.

Chong be­lieves KLK wants an en­try into MP Evans to­gether with a con­trol­ling in­ter­est to con­sol­i­date the busi­ness.

“If it’s purely to ac­cu­mu­late shares from the mar­ket, it will be mean­ing­less,” said Chong.

All is not lost how­ever, as he does not rule out the pos­si­bil­ity of KLK in­creas­ing the of­fer price for MP Evans, adding that it de­pends very much on KLK’s keen­ness for the plan­ta­tion com­pany. Chong said KLK has the fi­nan­cial mus­cle to of­fer a higher price, given that KLK’s gear­ing at around 0.48 times is still rel­a­tively low.

“For takeovers, it al­ways boils down to the pric­ing. If the price is con­sid­ered at­trac­tive enough for MP Evans, I think they will let go,” said Chong.

MP Evans said its board, hav­ing con­sid­ered the of­fer to­gether with its fi­nan­cial ad­viser Roth­schild, is un­hesi­tant in unan­i­mously con­clud­ing that the of­fer by KLK is wholly in­ad­e­quate and sub­stan­tially un­der­val­ues the com­pany, its unique po­si­tion and its fu­ture growth po­ten­tial.

Had­s­ley-Chap­lin added that the of­fer re­flects nei­ther the ex­ist­ing value of the group’s plan­ta­tions nor the fu­ture value from its clearly de­fined strat­egy sub­stan­tially to in­crease its planted hec­tarage. This strat­egy re­mains firmly on track.

“The group’s proven record for oper­a­tional ex­cel­lence un­der­pins the board’s con­fi­dence in ex­e­cut­ing this strat­egy suc­cess­fully and de­liv­er­ing sig­nif­i­cant long-term value. Share­hold­ers’ best in­ter­ests are served by re­ject­ing this of­fer,” he said.

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