The MYR2.35 (US$0.5687) per share being offered for casino group Genting Malaysia Bhd’s stock for a takeover and delisting exercise by its parent, is “not fair and not reasonable,” says an independent advisor to the target company.
The day’s high for Genting Malaysia’s stock as of 1pm Malaysia time on Friday, was MYR2.38, a 1.28-percent premium to the offer price. That is according to Bursa Malaysia data.
The advice from Kenanga Investment Bank Bhd was in a Thursday circular, and recommends existing shareholders “reject” the MYR2.35 offer.
The institution’s counsel relates to the bid by parent Genting Bhd, announced in October as part of a voluntary and conditional takeover.
Genting Bhd’s takeover offer became unconditional in early October, after the parent’s stake in Genting Malaysia surpassed 50.0 percent.
By 5pm on Thursday, Genting Bhd had upped its stake to 57.0 percent, and the offer had additionally become a mandatory one under bourse rules.
The closing time and date for acceptance has been extended to 5pm Malaysia time, on December 1, from a prior November 24 deadline.
Kenanga said: “If the holders so wish and if the trading liquidity permits, they may consider disposing their offer shares in the open market or via direct business transactions if they are able to obtain a price higher than the offer price, net of transaction costs and assuming that there will not be any revision to the offer price.”
The independent advisor said that “premised” on a “sum of the parts valuation, the offer price represents a discount between 32.47 percent to 37.67 percent per Genting Malaysia share”.
That was in relation to “the estimated value of Genting Malaysia shares of between MYR3.48 and MYR3.77 per Genting Malaysia share, derived from using the sum of the parts valuation method, as well as a discount to the 1-year and 2-year high market price of Genting Malaysia shares up to the notice,” stated the institution.
As of Thursday, the total of Genting Malaysia shares acquired by the suitor on the open market since it made its unconditional voluntary offer, had risen to nearly 114.5 million.
Genting Malaysia operates a number of casinos around the world. The firm’s flagship property is Resorts World Genting, Malaysia’s sole licensed casino. The company also runs gaming operations in the United Kingdom, Egypt, the United States, and the Bahamas.
According to the parent, the takeover would enhance Genting Malaysia’s financial profile as the latter is in the run for one of three full-scale downstate New York casino licences that are likely to be awarded by the end of 2025.
Genting Malaysia is proposing to extend and upgrade its existing Resorts World New York City slot-machine and electronic gaming facility in the borough of Queens, New York City.
