Research house says the buyout offer of RM6.15 a share represents a fair exit for minority shareholders.
The Swiss-owned distributor of Fortune 500 companies’ consumer goods, healthcare products, materials, and technology saw its shares rise as much as 73 sen or 13.85% to RM6, its highest level since June 2014.
The stock pared its gains to close 11.95% or 63 sen higher at RM5.90, valuing the group at RM930.2 million. Year to date, the shares have risen 19%.
In a bourse filing yesterday, the company said its controlling shareholder, DKSH Resources (Malaysia) Sdn Bhd, plans to take it private through a RM249.1 million, or RM6.15 a share, selective capital reduction and repayment (SCR) exercise.
The offer represents a 16.7% premium to Monday’s closing price of RM5.27 and a 24% premium to DKSH’s 12-month volume-weighted average price of RM4.96.
The SCR essentially involves cancelling 40.5 million shares, or 25.7% of the issued share capital, held by the minority shareholders.
DKSH Resources, which is wholly owned by Switzerland-based DKSH Holding Ltd, currently owns 74.3% of the company.
DKSH Resources said the SCR provides shareholders a timely opportunity to exit at a premium, citing persistently low trading liquidity and a more volatile operating environment.
The stock has historically been thinly traded, with an average daily volume of 48,492 shares over the past three years, representing only 0.12% of its 40.4 million-share free float.
Meanwhile, Hong Leong Investment Bank (HLIB) said the privatisation offer represents “a fair exit” for the minorities.
“We recommend that minority shareholders accept the offer, rather than remain exposed to potentially prolonged share price stagnation should the proposal not materialise,” it said in a note today.
“The SCR offers shareholders a fair and immediate opportunity at a notable premium, particularly given DKSH’s persistently low liquidity and the offeror’s clear intention to delist the company,” it added.
DKSH was incorporated in 1991 and listed on Bursa Malaysia in 1994. However, its presence in Malaysia goes back over a century, starting with Diethelm & Co (predecessor to DKSH) opening a branch in Penang in 1923, evolving from older trading houses established in the 1860s.
It distributes a host of fast-moving consumer goods brands such as Campbell, Kellog’s, Procter & Gamble, Pepsi, Ovaltine, SCS, to Famous Amos cookies, and healthcare brands such as Abbot, Johnson & Johnson, Blackmores, Roche, and Haw Par. - FMT
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