As such, the final price will always lie somewhere in between these two extremes.
“Both parties will therefore have to compromise and come to a mutually agreeable price, one that the authorities have mandated must be ‘fair and reasonable’,” says Gerald.
He notes that Lian Beng, as at end of Nov 2022, has reported a net asset value of $1.54 per share, which means the offer price of 62 cents is a discount of 60%.
In contrast, Chip Eng Seng Corp, another construction and property firm, was privatised recently at a discount of 25% off the NAV.
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“Companies that have wooed investors at IPO and have made promises of good returns, should not short-change those who have put their trust in them,” says Gerald.
“SIAS will not stand by and allow companies, which can afford to pay, to get away with lowball offers that are not fair and reasonable,” he adds.
Given that Lian Beng is financially strong with retained earnings of $721.2 million and cash of $246.9 million as at end-November, an upward revision is clearly warranted.
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“SIAS calls upon the offerors to do so and table a fair and reasonable offer price,” says Gerald.
Lian Beng shares last traded at 66 cents, down 0.75%.
