Genting Malaysia takeover offer deemed unfair and not reasonable, says independent adviser

KUALA LUMPUR, Nov 13 — Shareholders of Genting Malaysia Bhd (GENM) have been advised to reject Genting Bhd’s RM2.35 per share offer to privatise the company, according to The Edge.

The Edge reported that Kenanga Investment Bank Bhd (Kenanga IB), acting as the independent adviser for Genting Malaysia, said the voluntary takeover offer is “not fair” as it falls below the company’s sum-of-parts valuation.

The advisory also described the offer as “not reasonable”, noting that investors could instead realise their investments on the open market.

According to the report, the RM2.35-per-share offer represents a discount of between 32.47 per cent and 37.67 per cent compared with Genting Malaysia’s estimated value of RM3.48 to RM3.77 per share.

The offer also comes at a 3.69 per cent to 19.52 per cent discount to the company’s one- and two-year high market prices, Kenanga IB said. 

The Edge added that Kenanga IB highlighted Genting Malaysia shares’ relative liquidity, with a two-year average monthly trading volume of 219.21 million shares, representing 8.08 per cent of free float — above the FBM KLCI average of 7.1 per cent. 

The adviser said the offer may not be reasonable if Genting fails to acquire 90 per cent of GENM to delist the company, pointing to Genting’s potential US prospects, including a New York licence bid and Empire Resorts restructuring.

According to the report that as of Nov 6, Genting and its affiliates held 52.13 per cent of Genting Malaysia, needing another 22.87 per cent to breach the public spread and 37.87 per cent to delist the company.

The offer’s first closing date is Nov 24 but may be extended. The offer notice was issued on Oct 13, when Genting held a 49.36 per cent stake in Genting Malaysia.

The Edge also noted that the non-interested directors of Genting Malaysia, excluding non-executive chairman Tan Sri Mohd Zahidi Zainuddin — who is also an indirect major shareholder of Kenanga IB — agreed with Kenanga IB’s assessment that the offer is “not fair” and “not reasonable”.

At noon, The Edge reported, Genting shares were one sen lower at RM3.51, valuing the group at RM13.61 billion. Genting Malaysia shares were one sen higher at RM2.36, giving the company a market capitalisation of RM14.01 billion.