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
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.