Obstacle in the way
A faction of minority shareholders of HLCAP holding out for better price
PETALING JAYA: The game is on to scupper the takeover of Hong Leong Capital Bhd (HLCap) as a faction of minority shareholders are attempting to wring a higher price from offeror Hong Leong Financial Group Bhd (HLFG).
HLCap closed at its day-high of RM1.80 yesterday, up two sen from the previous day and nine sen above the offer price on a sizeable volume of 2.72 million shares transacted.
The last time it reached these levels was back in mid-2007.
Companies being taken private typically trade on par with or below the offer price, but dealers familiar with HLCap told StarBiz it was highly likely that there were minorities looking to secure just above 2% of the total shares of HLCap.
“If they succeed, these shareholders could be a stumbling block to the takeover, possibly forcing the hand of HLFG to revise its RM1.71 per share offer,” said one dealer.
According to offeror HLFG’s announcement on Monday, it has to acquire a minimum of 90% of the shares it does not already own in HLCap before it can compulsorily acquire the rest of the shares.
Given that it holds 79.09% of HLCap, or 195.26 million shares out of the total share base of 234.61 million, HLFG needs to increase its interest by a further 18.8% to 97.9%.
In other words, anyone with as little as five million shares, or a 2.1% stake in HLCap, could prevent HLFG from taking full ownership of HLCap.
Although HLFG could still push through a delisting of HLCap, it would have to contend with dealing with this small number of shareholders.
Offerors typically prefer to own all the shares of their takeover targets.
The situation with HLCap bears resemblance to the takeover of Hong Kong-listed Guoco Group Ltd, another firm under tycoon Tan Sri Quek Leng Chan’s stable, which saw its share price jump following the offer to take it private at HK$88 (RM35.20) per share.
Guoco finished unchanged yesterday at HK$93 (RM37.50).
The offer for HLCap valued the Hong Leong group’s stockbroking, investment banking and asset management arm at slightly above one times book value, which was last recorded at RM1.70 at endSeptember.
HLFG’s offer was 20.4% higher than HLCap’s last-traded price of RM1.42 prior to its suspension last Friday, and a 29.55% premium to its five-day volume-weighted average price.