Despite differing views on the takeover offer of M3nergy Bhd, an overwhelming majority or over 85 per cent of its shareholders have accepted Adamus Avenue Sdn Bhd's offer price of RM1.85 per share.

A source close to the deal told Bernama that the offer price must have been deemed to be attractive, fair and reasonable, to compel these shareholders to make the acceptances.

And it will be more than a week to go before the August 3, 2010, deadline for acceptances, he said.

The source said this in response to a recent filing by M3nergy to Bursa Malaysia, which said that its board had viewed the offer to be unfair, unreasonable and uncompelling.

The board was reported to have said that it concurred with the opinions of both Hwang DBS Investment Bank Bhd, its financial adviser, and independent adviser TA Securities Holdings Bhd, that the offer was not compelling as it did not reflect the underlying value of the company as well as prospects of its business.

M3nergy is mainly involved in the oil and gas, marine and power industries with proven expertise in the field of engineering, project management, operations and maintenance, shipping and construction for the offshore industry.

Nevertheless, it is understood that the offer price which represents a premium of 9.47 per cent over the closing price of the share prior to the announcement of the offer on May 17, is within the range of takeover premiums of 8.61 per cent for the comparable takeover transactions over the last 12 months.

At the same time, the EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortisation) multiple of 9.59 times based on the offer price is above the average EV/EBITDA multiple of 9.13 times of comparable companies.

As such, the source said Adamus was offering a better price for M3nergy shares as compared to the market prices of similar companies in the same oil and gas industry.

It was also reported that the earnings of M3energy have not been stable as its shares have been thinly traded for the last one year with the price hovering below RM1.50 most of the time.

Over the past 12 months preceding May 14, 2010, the daily average trading volume was 104,005 shares which represented about 0.08 per cent of the issued and paid-up capital of the company as at March 31, 2010.

As such, any further acceptances would be beneficial as shareholders could exit and cash in on the cost of their investment while realising a tidy premium without having to take on further exposure to potential market price risk.

With just over a week to go before the deadline, the source said, acceptances for Adamus offer were edging closer to the 90 per cent acceptance level required by Adamus to undertake the privatisation exercise of M3nergy.

Among the shareholders that accepted the offer is Melewar Equities (BVI) Ltd, which owned 45.42 per cent of the controlling block (57.531 million shares) in M3nergy.

In throwing support for the reasonable offer price, Melewar Equities' chief principal officer Datuk K.C. Lim said the offer price was sufficiently attractive and viewed as an opportune time to dispose of its shares.

'This transactions will raise capital for our group's plan and solidify our business while allowing us to exit M3nergy without any future risk exposure and we are indeed glad to see this through,' he said.

Meanwhile, a source close to the deal said that in the event the required acceptances of the conditional offer by Adamus did not pull through, there is a high possibility that the current M3nergy share price could tumble due to the failure of the proposed exercise.

Any significant fall in share price, thereafter, will expose all those who have margin financing, which comprised the bulk majority of the shareholders who accepted the offer.

The effect is that shareholders would stand to incur potential financial loss, he said.

Furthermore, there are also no other alternative offers on the table, he added.

The M3nergy shares were traded at RM1.82 per share as at 3pm today. -- BERNAMA