KUALA LUMPUR: Shares of Malaysian Resources Corporation Bhd (MRCB) rose above the RM1.50 takeover offer made by its largest shareholder, the Employees Provident Fund Board (EPF), in a laggard play amid the significant gains in the market recently.

Some analysts believe the takeover offer price was no longer at play among investors who were focusing on the stock’s fundamental value, and instead of being the catalyst for an upward price movement, the takeover was actually holding back the stock.

MRCB’s share price closed at the day’s high of RM1.55, up five sen yesterday and it was the most actively traded stock with 26.58 million shares transacted. MRCB posted its 52-week high of RM1.80 on Jan 15, 2010.

Analysts said it was unlikely the EPF, which now has 36.28% of MRCB, would raise the offer price though it planned to keep the company listed.

HwangDBS Vickers Research said its sum-of-parts target price for MRCB was RM1.80 per share, which was 20% above the offer price and excluded any potential net asset value accretion from potential government land sale.

While it had advised minority shareholders not to accept the conditional offer based on the unattractive price, it said the RM1.50 would set the floor price for MRCB until the conditional offer expired.

On March 3, EPF had to extend a conditional takeover for the remaining MRCB shares it did not already own when its shareholding rose to 461.52 million shares or 33.78%. This arose after it was allotted 1.76 billion new shares under a rights issue.

Following the announcement, it acquired 34.16 million shares on March 4 and 5, increasing its stake to 495.68 million shares or 36.28%. The shares were acquired at an average price of RM1.4796.

“The EPF has highlighted that it intends to keep MRCB’s listing status. The offer is conditional that it holds more than 50% of the paid-up share capital upon closing of the offer, which is 21 days after the posting of the offer,” the research house said.

HwangDBS Vickers Research said its sum-of-parts target price for MRCB would rise to RM2.30 assuming MRCB clinched an additional 25 acres of government land in KL Sentral/Brickfield based on a plot ratio of 7 times and average selling price of RM700 per sq ft.

The research house said this might be conservative as it did not include the other government landbank — Jalan Conlay, Jalan Ampang Hilir and the Rubber Research Institute Malaysia land — which was also up for grabs.


This article appeared in The Edge Financial Daily, March 10, 2010.