The battle between SP Setia & PNB

These are busy times at the Bursa Malaysia, lots of corporate exercises are going on. PNB has made an offer for SP Setia at RM 3.90 per share:

http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/B5490709B1CA1D68482579190037A018/$File/Notice%20of%20take%20over%20offer.pdf

But the management doesn't like it at all:

http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/B5490709B1CA1D68482579190037A018/$File/Setia-Announcement-28.9.11.docx

"The Board has met to consider the Offer and are of the view, based on external valuations of the Company by investment analysts published before receipt of the Offer, that the Shares Offer and Warrants Offer fundamentally undervalues the Company. On this basis the Board, in the exercise of its fiduciary duties to protect the interests of minority shareholders, has decided to seek a competing offer from other interested parties to make an offer to purchase the Company's shares. The Board will also be writing to the Offeror to enquire whether they are interested in revising the Offer price upwards to reflect a price which is closer to the fair value of S P Setia Berhad."

This sounds good, a Board of Directors that tries to come up for the interests of its minority shareholders and hopes to find a competing, higher offer. Just a few months ago the share of SP Setia was often trading above RM 4.00, why would shareholders now accept an offer for only RM 3.90? It does not look very attractive.

On the other side, PNB does not intend to delist SP Setia, it likes to maintain the listing status. That is also good, minority shareholders should not feel "threatened" by owning shares of an unlisted company, or their shares being mandatory acquired.

In other words, this is the kind of corporate exercises that are healthy for the market.

Some links from The Star, Business Times and The Edge:

"Mixed reaction to PNB offer to acquire property developer SP Setia"

http://biz.thestar.com.my/news/story.asp?file=/2011/9/30/business/9603256&sec=business

"The Liew factor in SP Setia"

http://www.btimes.com.my/Current_News/BTIMES/articles/liewsway/Article/

"PNB defends bid for SP Setia"

http://www.btimes.com.my/Current_News/BTIMES/articles/pienby/Article/index_html

"PNB launches takeover of S P Setia"

http://www.theedgemalaysia.com/highlights/193717-pnb-launches-takeover-of-s-p-setia.html