Wednesday, 14 September 2011

Sime Darby's E&O bid poses policy dilemma (3)

In The Edge of September 12, 2011 are a few interviews with the key players of the Sime Darby / E&O deal: Deputy Managing Director Eric Chan, Tan Sri Wan Azmi Wan Hamzah (major shareholder) and Datuk Mohd Bakke Salleh, CEO of Sime Darby. What is remarkable is that nobody seemed to see anything wrong with the fact that certain shareholders would receive a large premium to the price on the market, while others (the Minority Shareholders) would not be able to get this same price. The interviewed persons hardly talked at all about Minority Investors nor showed sympathy for their plight.

I am rather surprised by this. Being involved in angel investing (investing in early stage startup companies) my company routinely insists on a "Tag Along" clause in the Shareholders Agreement. This gives us the right to sell our shares for the same price when Founders or large shareholders sell their shares (we are ourselves always Minority Shareholders). We explain this clause and the reasoning behind it to the Founders of the companies we invest in, who never had any problem with it, in the contrary.

The Minority Shareholders Watchdog Group made a good statement about this corporate exercise in their Newsletter of 7 September 2011, which can be downloaded here:

Sime Darby is caught in this controversy. Datuk Bakke, the CEO, said in his interview with The Edge: “To make a General Offer without the benefit of due diligence is not a wise thing to do”. But is it wise to make an acquisition of RM 766 million without due diligence? If buying 30% of E&O at the given price is considered a good deal to Sime Darby, then buying the full 100% for the same price per share should also be good in my opinion.

The Securities Commission (SC) is also caught in the controversy. On the website of Rocky's Bru, a document alleged to be an internal memo from the Chairman of the Securities Commission can be found:

If this alleged memo is indeed written (it has not been denied at this moment), then that has not made things better in my opinion, with the investigation still ongoing.

The SC finds itself in an akward situation, which was bound to happen, and will happen again if nothing changes.


  1. Honestly if the 'internal memo' in Rocky Bru's blog is indeed true - I am actually really really puzzled.

    Why the need to discus this with the PM and accept his understanding?

    And just beacsue the PM understands does this mean that everyhing is OK?

    And why quiet so long?

    I dont see any public disclosure about this on SC's website. But SC expects others to be transparent?

    More than two weeks already - what are they investigating for so long?

    I hope they dont stop short the investiagtions with just the Chairman's purchase of share prior to annoucement.

    You would note that GK Goh and AZman Hashim have been actively buying too.



  2. Hi Deva,

    Thanks for your comments. Yes, it is all rather puzzling. I too hope for a transparent decision in not too long time. A decision with arguments, so that some sort of case law is build up, to be used in future decisions.

  3. I've been following the previous posts on the Sime-E&O matter which is fast becoming a saga. There will be more to come I'm sure, with various twists and turns.

    Keep it up!

  4. Thanks Mat, let's wait and see.

  5. GK Goh and the other 2 vendors are raising fund for najib..

    why sc have to discuss with najib, because najib knows about this

    GK Goh is owned by CIMB, PM is using CIMB to do hanky panky things