KUALA LUMPUR (Feb 8): Independent adviser Inter-Pacific Securities Sdn Bhd has deemed the unconditional mandatory takeover offer for KUB Malaysia Bhd by JAG Capital Holdings Bhd major shareholder Datuk Seri Johari Abdul Ghani as "not fair and not reasonable", advising shareholders to reject the offer.

According to a circular note in KUB's bourse filing on Thursday, Inter-Pacific said that the offer price of 60 sen per share is unfair, representing a discount ranging between 68 sen (53.13%) and 73 sen (54.89%) over the estimated value per KUB share derived using the sum-of-parts valuation (SOPV) methodology, ranging from RM1.28 to RM1.33, before completion of the takeover.

It also represents a discount ranging from 47 sen (43.94%) to 75 sen (55.56%) compared to the estimated value per KUB share using the SOPV methodology, ranging from RM1.07, after completion of the takeover.

Inter-Pacific said that the offer is unreasonable since KUB shares, including any new ones from redeemable convertible preference share conversion, will still be tradable on the Main Market of Bursa Malaysia if JAG Capital intends to maintain KUB's listing status.

This provides shareholders with the opportunity to potentially realise their investment at prevailing market prices after the closing date, though there is no guarantee that prices and trading volume will remain the same.

On Jan 10, JAG Capital Holdings Bhd triggered a mandatory general offer (MGO) for KUB after purchasing 1.79 million KUB shares in the open market, raising its shareholding in the listed entity above the 33% threshold to trigger the MGO.

Johari, who is also minister of plantation industries and commodities, holds a 98.75% stake in JAG. The takeover offer follows a proposal to inject JAG’s 86.65% stake in cables and wire manufacturer Central Cables Bhd (CCB) into KUB in exchange for KUB preference shares, valued at RM119.42 million.

JAG stated that it does not intend to keep KUB’s listing status if it secures 90% of all KUB shares, but would keep KUB listed if it secures between 75% and 90% of shareholding.

Shares in KUB traded flat at 57.5 sen on Thursday morning, valuing the group at RM319.97 million.