Monday, January 24, 2011

Plus & QSR Brands- SC will Review Big Price Changes

PETALING JAYA: The Securities Commission (SC) said it will not hesitate to take action in cases of breaches of securities laws, including the offence of the creation of a false market for the shares of listed companies.
“The Securities Commission Malaysia reviews significant price movements and major corporate developments on an on-going basis. In the event of any breaches of securities laws, we would not hesitate to take appropriate action,” an SC spokesperson said in reply to questions from StarBiz.
However, the SC declined to comment on two specific cases that StarBizposed to the regulator.
These concern the circumstances surrounding QSR Brands Bhd andPLUS Expressways Bhd.
In QSR's case, late last year, three bids were made for the company (that owns KFC Holdings Bhd) and each bid contained an “indicative price” that the buyer was willing to pay. In each instance, all the three companies involved Kulim, which owns QSR, which owns KFC were suspended. The latter two bids valued QSR at RM6.70 per share and this was disclosed by Kulim and QSR.
In effect, this indicative pricing created some kind of floor price for the target company's shares. This naturally caused investors to punt that a deal was going to be done at that price. But only after the third bid was made did Kulim come out to say that “no, it wasn't selling QSR”.
In PLUS' case, the motives of a bidder called Jelas Ulung Sdn Bhd is being called into question. PLUS was originally the subject of a takeover by the UEM Group together with the Employees Provident Fund (EPF) at a price that worked out to RM4.60 per PLUS share. However subsequently, little known Jelas Ulung launched a rival bid, at a higher price that worked out to RM5.20 per PLUS share.

The PLUS independent directors then decided to seek more information from both bidders to determine the seriousness of their offers. A RM50mil deposit was required along with proof that both parties have secured the necessary funding to go through with the deal. However only the UEM-EPF bidders were able to fulfil these requirments. As a result of Jelas Ulung's failure to come up with the deposit or show proof of funding, market observers have questioned the true intentions of this party. The SC declined to comment if there was sufficient basis to launch an investigation into Jelas Ulung.
It should be noted that these situations tend to typically arise in cases of takeovers involving the assets and liabilities method. This is where bidders put in an offer to the board of a target company to acquire all the assets and liabilities of the company. T

he board then has to deliberate on the offer and make a decision as to whether to present the offer to shareholders to vote. Buyers typically make the offer conditional upon a due diligence of the target company, leaving it uncertain as to whether the deal will go through.
The matter is less complicated in takeovers involving a general offer for the shares of the target company, where bidders just launch their offer to shareholders.
Source: The Star, 24 Jan 2011

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