Hextar Industries shareholders told to reject takeover offer

KUALA LUMPUR (Nov 14): Minority shareholders of ACE Market-listed Hextar Industries Bhd have been told to reject the takeover bid by its major shareholder Hextar Holdings Sdn Bhd, as its independent adviser deems the offer price of 38.175 sen per share as “not fair” and “not reasonable”.

Hextar Holdings owns a 45.66% stake in Hextar Industries, formerly known as SCH Group Bhd.

The mandatory takeover offer by Hextar Holdings was triggered after the share sale agreement signed on Aug 8 between Hextar Holdings and Hextar Industries, for Hextar Industries to acquire the entire equity interest in Hextar Fertilizers Ltd, a manufacturer of a wide range of fertilisers, from Hextar Holdings for RM480 million became unconditional on Oct 12.

The acquisition was to be satisfied via the issuance of new shares in Hextar Industries. It was reported that Hextar Holdings is 64.7%-owned by Datuk Eddie Ong Choo Meng, together with his parents Datuk Ong Soon Ho (23.9%) and Datin Teoh Siew Yoke @ Teoh Siew Chin (11.4%).

Upon issuance of the consideration shares, it sees the Ong family’s shareholding in Hextar Industries increasing from 45.66% to 77.31%. Thus, they are obliged to extend the offer to acquire the rest of Hextar Industries shares.

In a Bursa Malaysia filing on Monday (Nov 14), Malacca Securities Sdn Bhd said even though the offer price of 38.175 sen per share is higher by 30.49% than the estimated value of Hextar Industries shares of 29.256 sen as at Nov 7, it is of the view that the offer price is not fair after taking into consideration that it is 33.61% lower than the closing price as at Nov 7 of 57.5 sen, and 38.08% lower than the five-day volume weighted average market price up to the Nov 7 of 61.65 sen.

“The offer is ‘not reasonable’ after having considered that it is the intention of the offeror (Hextar Holdings) to maintain the listing status of Hextar Industries on the ACE Market. Therefore, Hextar Industries shares will remain traded on Bursa and the holders will have the opportunity to realise their investments in Hextar Industries shares in the open market after the closing date,” the independent adviser said.

Thus, Malacca Securities is advising minority shareholders to reject the takeover offer, which will remain open until Nov 23.

At market close, Hextar Industries shares were down two sen or 3.4% at 56 sen, bringing it a market capitalisation of RM642.51 million.