IOI- what's up?

One of the most noticeable under-performer in the current rally is IOICorp. I believe the main reason for this is that IOICorp will be issuing as much as 123.1 million new IOICorp shares under the proposed takeover of IOIProp. IOICorp has earlier proposed to acquire all 199.7 million shares in IOIProp not already owned by IOICorp at an offer price of RM2.598 per IOIProp Share to be satisfied in the following manner :-

i) the issuance of zero-point-six (0.6) ordinary shares of RM0.10 each in IOICorp at an issue price of RM3.78 per IOICorp Share; and

ii) RM0.33 in cash,

for each IOIProp Share held.

The takeover is nearing completion. IOICorp shall post the cash portion of the Offer Consideration and credit the share portion of the Offer Consideration into the Central Depository System accounts of all the Accepting Holders not later than 21 April 2009. I think investors must be worried that the increased supply of IOICorp shares may affect the share price. I believe the effect will not be significant.


Chart: IOI's daily chart as at 14/4/2009 (Source: Quickcharts)