Friday, August 10, 2012

E&O- Sime Darby to make GO for E&O at RM2.30?

The Securities Commission (SC) will now order Sime Darby Bhd to make a general offer for Eastern & Oriental Bhd (E&O) shares after buying a 30-per cent stake last year, say government sources. For more, go here.

If it is true, shouldn't SC order E&O to suspend trading on the stock immediately?

 Chart 1: E&O's 30-min chart as at August 10, 2012_4.45pm (Source: Quickcharts)

 Chart 2: E&O's weekly chart as at August 10, 2012_4.45pm (Source: Quickcharts)


David Koay said...

Hello Alex, Some smart fella in the govt started this rumor. Maybe the govt source should be investigated for possible insider trading, but I guess nothing will be done.

Richard Chin said...

Hi Alex, if it is true that Sime Darby is ordered for MGO, Sime has to buy back the rest of the shares with RM2.30. I was holding E&O 300 lots before the announcement made around end of Aug 2011, however I had sold 300 lots at 1.56 on 2-Sep-2011. If MGO is on, am I entitled for the compensation of 74sens? (74 sens is equivalent to about RM21k~22K).

Alex Lu said...

Hi Richard Chin

I guess your question is a moot point now. However, if EPIC belated privatization is a guide, you would still get compensated.

The question that begs answering is whether those, who bought subsequently and sold off before a volte-face (if any), would get any compensation.

However, I still feel that Sime must make a GO as it has obtained management control despite acquiring only a 30%-stake. While the trigger for GO is 33%, the essence is whether the acquirer has gained management control. In my opinion, Sime did. The intention is very clear from the way the deal was struggled: the above market price paid for the stake & the pro-rata allocation of the stake to be acquired amongst the then 3 major shareholders.

All in all, this could be a messy affair that does not reflect well on SC.

Richard Chin said...

Hi Alex, thank you for answering my doubts. I wish you can determine which date should be the "cutoff" date? Is the date of suspension (26-Aug-2011) or the announcement of buying 30% by Sime at 2.30, i.e. 28-Aug-2011? Or, is the date that the 3 directors transferred their shares on 9-Sept-2011? My concern is I had 300 lots before the suspension and sold all at 2-Sept-2011.

Can you find out when is the date of cutoff though I am still in a moot point, please kindly advise.

Thank you, Sifu.