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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)


4 comments:

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.

http://www.themalaysianinsider.com/malaysia/article/sc-to-order-sime-general-offer-for-eo-say-sources/

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.