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Why offer to buy up the whole listed company? Offer of 60 sen.

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Why go for public listing?

A company would aim for public listing because it wanted the public to recognise its business value and in the process get the public to invest into the company. The public would get to participate in the growth of the company and as the company continues to grow its business, the share price should technically keep moving upwards. This would make the company shareholders happy and would usually attract even more to buy the company share and this would push its share price up further.

Of course there are also many other reasons too. For example, to get more credibility, to make the brand more well known and for the owner to cash in by selling some shares.

Sometimes, this does not happen (value recognition by the public)

People somehow does not see the value of the company and the owner may become frustrated and seeks some funds who had the same thought to buy up all the shares of the company and get it delisted instead. They are confident that the profits of the company is more than enough to repay the loan used to buy the company shares.

This happened a few years ago to a company I rate highly but many did not. HOVID. This is one of the pharmaceutical company with full R&D and it’s highly recognised throughout the world! Anyway, I was forced to sell all the shares when it got delisted after the owner has bought enough of the shares from the public. It seems that there may be another such potential happening and this time, it’s within the real estate industry.

Article in thestar.com.my. Property developer Easter & Oriental Bhd said Datuk Tee Eng Hong, one of its directors, has made a conditional mandatory general offer to buy out minority shareholders in the company for 60 sen a share. This is after Tee, through his private investment vehicle Amazing Parade Sdn Bhd on Friday acquired an additional 10.89% stake in the company from Sime Darby Bhd for 93.5mil, or 60 sen a share. Together with other parties acting in concert, the offeror’s stake in E&O has increased to 42.71%, triggering a conditional mandatory takeover offer. Article in thestar.com.my

No speculations please, just wait for the news which would definitely be reported soon

Of course, I have no idea about the actual intention for this mandatory takeover offer. However, it is definitely because the offeror sees the value in publicly listed Eastern & Oriental Berhad yeah. This is the share yeah. The price is close to the 60 sen being offered. As for analysts, their target price for this company is lower than 60 sen. Here’s that information from i3investor.com. Image as below yeah. Perhaps from the target price by the analysts, we could guess the reason for the 60 sen offer yeah.

All the best to the company and all its shareholders. This may not be the best time for real estate listed companies and perhaps this may not be the only case. There are definitely many other real estate developers where the share price is trading at even below its total landbank value! 🙂 Happy investing and it does not need to be just buying the property itself. It could also be buying the shares of the developer you love too.

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