Saturday, August 11, 2012

And The Sources Strikes Big At E&O

Far too long I have been highlighting the According To Sources issue on this blog. After a while this blog gets caught in a repetitious cycle of repeating and repeating and repeating itself. Is like, do you guys and gals really care? Or perhaps it only matters if it happens to us ( I do hope not). I just don't know.

As mentioned before:

  • Yeah, our financial news can be really incredible at times. Many a times, a story will be spun by our financial news wizard reporters. The way they write, the way they spin the story around and around, they can really make any given stock sounds soooooo sexy.
And sexy stocks do sexy stuff. The stock prices soar.

Think about it.

I write an article, I throw in the 'according to sources' this and that and that is going to happen. It's going to make Fly Kacang Fly Bhd fly!

Punters read the story, they treat those words as gold.

They get on the phone, they call their remisers and orders truckloads of the Fly Kacang Fly stock. Or they just let their fingers walk the talk by keying their truckloads of the stock via on-line trading.

And as long as they make their money, they don't care whether the story is really true or whether the story just cooked up to seduce them to punt the stock 

Take for example, the last posting made on this According To Sources issue: And According To Sources .... . Did that sexy story came out exactly as what the so-called sources clam??

And I said many times, anyone could a source of imformation. The Fly Kacang Fly's mak cik who brings the tea for the Boss could be a source of information, yes? The toilet cleaner also could be one. Anyone in Fly Kacang Fly could be a source. Whether they are reliable source is another issue.

Or what if the source does not even exist? What if the 'according to source' is used just to lend some form of credibility to the said rumours?

Not possible?

Anyway, yesterday, the SOURCES hit big time. Really big time. Center stage. It's showtime!

On MalaysiaInsider:

  • SC to order Sime general offer for E&O, say sources August 10, 2012

    KUALA LUMPUR, Aug 10 — In a volte face, 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.

    The Malaysian Insider understands the decision was made after a review by the leadership under new SC chairman Datuk Ranjit Ajit Singh.

    “The SC has reviewed the matter and decided to overturn the earlier decision made when Tan Sri Zarinah Anwar was the chairman,” a government source told The Malaysian Insider.

    Ranjit, who was the SC managing director, took over as chairman after Zarinah ended her term last March 31.

    Another source confirmed the review and said the decision will be made public soon.

    Sime Darby purchased its controlling 30 per cent interest in the property developer from three major shareholders — managing director Datuk Terry Tham, Singapore’s GK Goh Holdings and a group of investors led by businessman Tan Sri Wan Azmi Wan Hamzah — at the end of August last year in a deal that valued E&O shares at RM2.30 a piece.

    The purchase price represented a 60 per cent premium over the value of the shares in the company on the open market when the deal was announced.

    The RM776 million deal triggered unease over the widely-perceived coddling by the agency of large state-controlled companies at the expense of minority shareholders when exercising its authority on corporate takeovers.

    The SC ruled six weeks after Sime Darby’s purchase of the three blocks that the plantation-based conglomerate need not make a general offer, prompting E&O minority shareholder Michael Chow to sue the SC for failing to compel Sime Darby to make a general offer for the rest of the shares.

    The legal suit has renewed debate over the SC’s handling of alleged irregular trading activities and had put pressure on Zarinah, whose husband — the E&O chairman — had raised his personal stock holdings in the company just weeks before Sime Darby announced the acquisition.

    The SC has also filed an application to recuse the judge hearing the suit as he used to be with the regulator. But the judge dismissed the application, only for the SC to file an appeal with the Court of Appeal, which heard the case yesterday.

    Singapore’s Straits Times reported last January that a SC task force found that Sime Darby was obliged to make a general offer for E&O shares after acquiring a 30 per but was superseded by the regulator’s top ruling authority.

    The daily reported that the task force was of the view that a general offer obligation had been triggered as a new “concert party” was created between Sime Darby and Tham, who jointly controlled more than 33 per cent in the property concern after the deal.

    Malaysia’s takeover rules stipulate that any party that acquires more than a 33 per cent interest in a publicly-listed entity must carry out a general offer for the remaining shares.

    A general offer can also be triggered if a new party buys less than 33 per cent but secures management control of the target company.

    But the SC’s final ruling three-member committee adjudged “in a majority decision” that there was no general offer obligation as Sime Darby and Tham were not acting in concert, according to an affidavit by the agency’s second-most senior commissioner Datuk Francis Tan, which was sighted by the Singapore daily.

    The committee also accepted the task force’s recommendation that the three groups that sold the blocks of E&O shares to Sime Darby did not collectively control the company and that the disposal did not trigger a general offer.
That news came late in the afternoon.

This sexy piece of stock started a buying frenzy. It was incredible. Some were screaming for the stock to go limit up. This piece of news whose sole credibility was based on  sources, un-named sources. ( Ever wonder who these sources are?)

Notice how E&O took off for the moon at around 4 pm.

And then came the news at 5.50pm.

  • Published: Friday August 10, 2012 MYT 5:50:00 PM
    SC's position on GO in Sime-E&O remains unchanged By Joseph Chin

    KUALA LUMPUR: Sime Darby Bhd does not have to make a general offer for the remaining shares in Eastern and Oriental Holdings (E&O) after it acquired a 30% stake, according to the Securities Commission.

    The SC said in a statement on Friday that its position on the GO requirement in the Sime Darby-E&O acquisition remained unchanged as per the statement issued on Oct 11, last year.

    "The decision is now subject to judicial review which is pending in court," the SC said.

    Securities of E&O surged in active trade late Friday on a news portal report that the SC would now order Sime Darby to make a GO for the remaining E&O shares.

    E&O surged 42 sen to close at RM1.90 with 44.74 million shares done while its call warrants E&O-CA jumped 16c to 16.5 sen.

    In the Oct 11 statement, the SC had stated it concluded the review of the circumstances surrounding the acquisition of 30% equity interest in E&O by Sime Darby for any Take-Over Code implication.

    The SC had then stated in the course of the review, parties involved in the transaction were interviewed and relevant documents procured.

    It said the review included an assessment of possible concert party relationships between and amongst the parties involved. Precedents in Malaysia and practices and rulings in other jurisdictions on similar issues were also examined.

    "Having analysed all the evidence gathered, it is the SC's finding that the acquisition of the 30% equity interest in E&O by SDB had not given rise to a mandatory offer obligation under the Malaysian Code on Take-Overs and Mergers 2010," according to the statement.
Oh oh!

How now brown cow?

SC is now denying the news published on Malaysia Insider.

And this is a delima. A massive delima for punters who punted based on the news released by Malaysia Insider.

All thanks to Malaysia Insider's un-named government sources, these punters will be worried about the fate of their punt made yesterday afternoon.

Will the denial send the stock plunging?

How now brown cow?

Would you continue to punt on stocks based on news sources who quotes un-named sources?

( see also: )

( ps: if this blog posting was published at 4:30 pm, I wonder what would be the reaction?  Would I get 'Here we go again... pouring cold water again... Ah Chi Ah CHor so much ..... )


    M.A. Wind said...

    Yes, a pretty suspicious case, the timing also, just before the weekend, and the SC court case has just resumed again. I guess we have to wait and see how this will pan out. Will they investigate Malaysian Insider, will they reveal their "sources", will there be a GO, what will the result be of the court case. Too many question marks.

    Mun Wai said...

    Total freedom of speech in Bolehland, exclusive ly for some priviledged ones.

    limko said...

    According to sources, the GO will take place at an opportune time based on information from a reliable source.

    Mun Wai said...

    Perhaps one shall stay away from such according to sources 'news' to deny the incentive of 'leaking' such 'insider tipsie' to the public.

    But, what's the probability of wisdom overcoming the temptation of greed, would the Cow please tell me :P

    The 'source' sounds so convincing, gvnt source.