Datuk Seri Dr Pang Chow Huat unconditional mandatory general offer (MGO) to acquire all the remaining shares in Computer Forms (Malaysia) Bhd not owned by him at RM0.60 is deemed not fair and not reasonable accordingly must be rejected by shareholders, according Mainstreet Sdn Bhd who are the independent advisors to the shareholders
In an Independent Advice Circular (IAC), the Board said that after careful assessment of the terms and conditions of the Offer as contained in the Offer Document and the evaluation as contained in this IAC, it has concurred that the Offer is NOT FAIR and NOT REASONABLE and accordingly it rejects the offer.
It said that holders who wish to exit their investments in CFM can also consider selling the CFM Shares in the open market if they are able to obtain a price higher than the Offer Price, net of transaction cost and assuming that there will not be any revision to the Offer Price.
The independent advisors were of the opinion that the asset-based valuation approach, i.e. comparing the Offer Price against the NA per CFM Share is the most appropriate valuation methodology to arrive at the fair value of CFM Shares for the following reasons:
It said that the CFM Group had been making losses for the five (5) financial years up to FYE 31 March 2020 and marginal PAT for FYE 31 March 2021 coupled with weaker demand and challenging economic environment faced by the Group.
It said that as a result, the Group is not expected to have any consistent or predictable earnings going forward.
The IAC said that it has not adopted the earnings-based valuation method, including the discounted cash flow approach for the purpose of deriving the valuation for the respective core business segments of the Group.
It said that the Company paid a special dividend of RM0.20 per Share in FYE 31 March 2022, which was funded from the proceeds from the Disposal of Properties.
Prior to this, CFM had not been paying dividends from 31 March 2006 to FYE 31 March 2021. Hence, we have also not adopted the dividend discount model to determine the fair value of CFM Shares;
It said that based on the asset-based valuation approach, the Offer Price of RM0.60 per Offer Share is higher than and represents a premium of RM0.27 (81.82%) over the unaudited NA per CFM Share as at 31 December 2021 of RM0.33.
