KUALA LUMPUR (Jan 8): Kenanga Investment Bank Bhd (Kenanga IB) said the unconditional mandatory takeover offer by Sime Darby Bhd to acquire the remaining shares in UMW Holdings Bhd at RM5 per share is “not fair but reasonable”.

In an independent advice circular, Kenanga IB said the offer price of RM5 per share represents a discount of 60.8 sen to RM1.017 or about 10.84% to 16.9% to the estimated value of between RM5.608 and RM6.017 per UMW share, derived from the sum-of-parts valuation methodology.

The offer price also represents a premium ranging from 44.8 sen (9.83%) to RM1.578 (46.11%), over the last traded market price of UMW shares as at Aug 23, 2023 (being the last trading date (LTD) prior to the signing of the share purchase agreement (SPA) and the five-day, one-month, three-month, six-month, one-year and three-year volume weighted average market prices up to and including the SPA LTD.

“We further noted that the market prices of UMW shares have been trending close to the offer price after the SPA LTD and up to the latest practicable date (LPD),” said Kenanga IB, which deemed the offer price as not "fair".

On the reasonableness of the offer, Kenanga IB said Sime Darby does not intend to maintain the listing status of UMW.

As such, the group will not be taking any steps to address any shortfall in the public shareholding spread of UMW in the event UMW does not meet the public spread requirement after the closing date.

The first closing date of the offer is at 5pm on Jan 17. As at the LPD, Sime Darby directly holds 83.6% of the total issued UMW shares, while UMW’s public shareholding spread stood at 16.4%.

Save for the offer, UMW confirmed that it had not received any competing offer or alternative offer for its securities, or its business, assets and liabilities, which provides an opportunity to Sime Darby to realise their investments, Kenanga IB added.

At Monday's noon break, Sime Darby's share price rose six sen or 2.56% to RM2.40, giving it a market capitalisation of RM16.36 billion.

UMW was unchanged at RM5, valuing the group at RM5.84 billion.