ENGINEERING solutions provider Patec Group has made a mandatory conditional cash offer to take Broadway Industrial Group private at S$0.197 in cash a share, it was announced on Monday (Oct 28).
The offer comes after Patec acquired some 197 million Broadway shares from the company’s non-executive director Lew Syn Pau and Lau Leok Yee. These shares represented about 43.3 per cent of the company’s share capital excluding treasury shares.
Prior to the acquisition, Patec did not own or control any shares. Thus, this recent purchase triggered the mandatory conditional cash offer for all Broadway’s shares, excluding treasury shares and those already owned, controlled and agreed to be acquired by Patec.
An announcement by UOB, who is the financial adviser to Patec, said that if any distributions were paid after the date of the announcement, Patec can reduce the offer price by the amount of the pay-out.
The offer price of S$0.197 a share represents a 7.5 per cent discount to Broadway’s net asset value of S$0.213 as at Jun 30, according to the company’s last published financial statements
It is 7.1 per cent higher than the counter’s last transacted price of S$0.184 on Oct 25, the last full trading day before the offer announcement.
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The offer price also represents a premium of about 27.1 per cent, 7.1 per cent, 3.1 per cent and 3.7 per cent over the 12-month, six-month, three-month and one-month volume weighted average prices, respectively, up to the last trading day.
The offer is conditional upon Patec receiving valid acceptances, which will result in the offeror and concert parties holding more than 50 per cent of Broadway at the close of the offer.
UOB noted that the offer provides shareholders with an opportunity to “realise their investment in the shares at a premium over the historical trading prices”, without incurring brokerage and other trading costs.
The offer allows Patec to expand its product and service offerings in the region, said the financial advisor. This is because Broadway manufactures precision-machined components and has businesses in Thailand, China and Vietnam. It also operates in South Korea and is headquartered in Singapore.
Listed on the Singapore Exchange’s mainboard in 1994, Broadway also sells, distributes precision components and parts, as well as provide after sales services, among other segments.
UOB also said Patec intends to make Broadway its wholly owned subsidiary and “does not intend to preserve (its) listing status”.
Patec currently intends to ensure Broadway’s operations continue after the deal. It also wants to undertake a review of the operations, management and financial position of Broadway.
The offeror will also restructure and optimise the business operations of Broadway to integrate them with those of the Patec group post-offer, said UOB, who also cautioned that such initiatives may involve “significant capital expenditure”.
Shares of Broadway Industrial Group ended Friday flat at S$0.184, before it requested a trading halt on Monday morning.