Thank you for listening SC!
Posted the other day: Independent adviser claims BRDB OFFER NOT FAIR BUT...
I ranted like mad because I thought the advice was rubbish. I wrote.
- What kind of recommendation is that?
The offer is deemed not fair but reasonable and because it is reasonable the minority shareholder should accept the offer???
Look if it is not fair, it is not fair.
Simple as that.
Why use the share price versus the offer price as yardstick to determine if it is reasonable for the minority shareholder to accept the offer?
The offer should always be gauged against the fair value of the company and NOT AGAINST THE STOCK PRICE!
The independent advisor should have known this better!
Look they admitted already that the offer is not fair.
So why should the minority shareholder short change themselves by accepting any offer less than fair?
- SC imposes new demands on advisors for takeover offers
Written by Ho Wah Foon of theedgemalaysia.com
Tuesday, 25 September 2012 18:25
KUALA LUMPUR (Sept 25): The Securities Commission Malaysia (SC) has issued an expanded Practice Note, imposing more requirements on independent advisors for take-over offers.
In a statement Tueday, the capital market regulator said the enhancements -- to take effect on Nov 1, 2012 -- will provide shareholders to a take-over offer with “clearer and more comprehensive advice to enable them to make informed decisions”.
Under the expanded Practice, advisers are required to consider ‘fair and reasonable’ as two discrete terms in making a recommendation. For an offer to be ‘fair’, the offer price must be at least equal to or more than the value of the securities of the take-over offer.
To decide whether an offer is ‘reasonable’, advisors have to evaluate the ability of the offeror to pass special resolutions, liquidity of the offeree securities and other qualitative considerations, the SC said.
“The decoupling of the terms will further ensure that independent advice circulars are more easily understood, transparent and provide clear bases to justify a recommendation,” it said.
The Practice Note also requires advisers to select the most appropriate valuation methodology for the securities and provides guidance on various types of valuation methodologies.
Advisers are also needed to base their opinion on reasonable assumptions, to disclose all material assumptions and to ensure they have a reasonable basis to rely on information used in forming an opinion on the offer.
The introduction of these new requirements appears to come in response to public criticism that the securities watchdog has failed to act on complaints by minority shareholders in some recent events.
For example in the privatisation of Glenealy PLANTATION s Bhd, the company’s major shareholder did not provide minority shareholders with an independent valuation of the company’s assets. It merely used an outdated valuation price, which disgruntled shareholders said were grossly undervalued.