[SINGAPORE] The bid from Tal United to acquire Sin Heng Heavy Machinery at S$0.58 a share mid-last month has been described as a “lowball offer” by the Securities Investors Association (Singapore), which has advised shareholders to reject the offer.
This is on the grounds that Sias’ appointed independent financial adviser (IFA) has assessed the offer to be “not fair and not reasonable”.
The IFA found the offer price to be below the median and mean of the share to net asset value (NAV) ratios of “selected comparable transactions”.
In a statement on Monday (Apr 21), Sias founder and chief executive David Gerald noted that the current offer price is at a 41 per cent discount to the estimated NAV of S$0.98 per share. This figure would be even higher if a dividend of S$0.05 were to be excluded from the offer price.
Additionally, Sin Heng displayed positive performance from FY2022 to FY2024. In those three financial years, the group’s net profits went from S$3.65 million in FY2022 to S$6.27 million in FY2024.
The group also declared dividends in financial years, with a dividend yield ranging between 7.6 and about 11 per cent.
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Tal United had previously said the price was final and would not be revised. The offer closes at 5.30pm on Apr 30.
Gerald said that it is in the best interests of all minorities to collectively send a message to the offeror that they “will not accept such a lowball offer”. No action is required from the shareholders to reject the current offer.
“We believe the company has incurred unnecessary costs to respond to this offer by TAL United. While any party has the right to make an offer to shareholders, Sias urges all offerors to act responsibly and fairly.”
He added that if Tal United remained sincere in taking Sin Heng private, he believed that it should consider a revalued NAV of S$1.15 a share as a starting point.
Tal United is a consortium formed between companies Tal Holdings (TALHPL) and United Hope (UHPL), which are controlling shareholders of Sin Heng.
In a previous bourse filing in March, Tal United said its offer to delist and privatise the heavy equipment rental business was aimed at providing “greater control and management flexibility to manage the business of the group, respond to changing market conditions and optimise the use of the company’s management and resources”.
Sin Heng has a total issued and paid-up share capital of about S$43.1 million, comprising nearly 114.9 million shares.
As at 4.04pm, shares of Sin Heng were trading 0.9 per cent or S$0.005 higher at S$0.585.
