Thursday, January 10, 2008

When A Listed Company Sells Its Core Business Away!

Imagine this.

Let me take for granted that you are an investor. You make your research and after due diligent, you come to a conclusion that this company called PomPiah, who sell famous delicious poh-piah, is making extremely good money, and you decide to take a plunge and be a shareholder of the company by buying some shares in the company. A year later, Pompiah announces it is selling its famous poh-piah franchise away. Now after selling, PomPiah is left without a core business.


Wouldn't this not be a massive concern for you the investor?

I mean company now has no core business and you do not know what lies ahead!

What if PomPiah decides to plunge into the rubber wood furniture business? And what if you reckon that this is rather a very depressing business to be in? But do you have a choice? Yes, you can vote against the proposal but what if it's no use?


Isn't it rather terrible that you are a minority shareholder of a listed company and the company then sells away its core business?

Terrible yes?

I mean how can..... right?

This is how I felt when I read the following news article:
Tamco to announce new core business in six months

  • Thursday January 10, 2008

    Tamco to announce new core business in six months

    SUBANG JAYA: Tamco Corporate Holdings Bhd will announce its new core business in six months, group managing director Abdul Latif Mahamud said.

    “We will make that announcement in six to eight months when we feel the time is right,” he said after the company EGM yesterday.

    Abdul Latif did not disclose the nature of the company’s future core business but said: “We are considering several options. We have plans but we cannot reveal them at this moment.”

    However, he confirmed that the company was venturing into “new and different” business streams.

    “We are looking at businesses other than what we have now and have identified certain areas,” he added.

    Meanwhile, deputy chairman Datuk Siew Ka Wei said the company was in good hands and had a promising outlook.

    “This is the management that brought the company from where it was (when it was listed) to where it is today.

    “The management deserves the trust (of its shareholders) to look for a new business that would create value,” Siew added.

    At the EGM, Tamco shareholders approved the proposed disposal of the company’s core switchgear business to India-based engineering company, Larsen & Toubro Ltd, for RM378mil.

    Siew said the bulk of the proceeds would be distributed to shareholders.

    Tamco will be disposing of its entire equity interest in four subsidiaries: Tamco Switch-gear (M) Sdn Bhd, Tamco Shanghai Switchgear Co Ltd, Tamco Electrical Industries Australia Pty Ltd and PT Tamco Indonesia.

    The disposal is expected to be completed in the first half of this year.

And it doesn't make it any better when you read the following statement..

  • Meanwhile, deputy chairman Datuk Siew Ka Wei said the company was in good hands and had a promising outlook.

Promising outlook?


How promising can the outlook be?


Another terrible funky music being played...