Iris' plan to buy stake in Patimas Rejected

Flashback: Saturday April 29, 2006

The following article was posted on Star News:

• Iris buys 32% stake in Patimas

  BY NICK LEONG

  PETALING JAYA: Iris Corp Bhd has accepted an offer to buy a 32% equity stake in Patimas Computers Bhd for RM72mil or RM3 per share.
  

  With the purchase, Iris becomes the single largest shareholder of the main board-listed technology company.
  

  A source close to the deal said Iris accepted the offer in view of Patimas' expertise in back-end information and communications technology (ICT) support.
  

  “The deal complements Iris’ strength, which is in the front end of the (ICT) business,” the source said yesterday.
  

  He said Iris' position in bidding for turnkey projects had been strengthened considerably with the acquisition.
  

  The source said the price of RM3 per share was reasonable because “Iris would have a controlling stake in Patimas.”
  

  
  
  
  “Analysts may perceive the price as high but Iris is also issuing new shares at the current (high) price,” he said.
  

  A statement from Iris said yesterday the company would issue new ordinary shares to the vendors at the five-day weighted average market price.
  

  “Based on the prevailing price, the new shares to be issued represent about 8% of Iris' enlarged share capital,” it said.
  

  Iris managing director Datuk Tan Say Jim said in the statement the proposed acquisition would create ample synergies and cross-selling opportunities for both companies besides pooling their resources.
  

  “The proposed acquisition is definitely a cheaper entry for Iris, which can save us considerable time and effort if we were to develop similar ICT platform ourselves.
  

  “We can also tap into Patimas' existing client base to promote our products.
  

  “Similarly, we also provide Patimas an avenue to introduce their products and services to our existing customers,” Tan said.
  

  He said the acquisition was earnings-per-share enhancing because the two companies would be able to expand their businesses at a faster pace.
  

  
  IRIS : [Stock Watch] [News]
  PATIMAS : [Stock Watch] [News]

April 2006.

Look at the picture in the article. Those were the prices of IRIS and Patimas.

Today. Jan 26th 2007.

SC rejects Iris' plan to buy stake in Patimas

• THE Securities Commission (SC) has rejected Iris Corp Bhd's plan to buy a 31.75 per cent stake in Patimas Computers Bhd.
  
  Iris told Bursa Malaysia yesterday that the deal was not approved as it does not show clear benefits towards Iris and consequently to its shareholders, taking into account the financial results of Patimas for the previous financial year.
  
  The SC, in a January 24 letter to the company, also had doubts about the reasonableness of the purchase consideration for the Patimas shares to be acquired, OSK Investment Bhd said on behalf of Iris.
  
  The proposed deal involved Iris buying 24 million Patimas shares of RM1 each for RM72 million from Forum Pintar Sdn Bhd, Mazlan Muhamed and Datuk Ng Back Heang.
  
  It would have been satisfied through the issuance of up to 109.09 million new Iris shares at 66 sen each or by way of cash payments.
  
  Patimas and Iris closed unchanged at 16 sen and 36 sen respectively yesterday.
  
  Iris is a security solution provider with core expertise in the area of securing government security documents.

Took so long to reject the deal???