Focus View
PUC minorities should not be shortchanged
FocusM | 04 Jan 2019 00:30
When ACE Market-listed PUC Bhd revealed that it has proposed to buy the remaining 67% stake in Pictureworks Holdings Sdn Bhd for RM167.5 mil, many were surprised with the higher price tag compared with the 33% stake it acquired six months ago.

PUC bought the 33% stake in the imaging services company for RM52.8 mil, or RM8.69 per share, via shares and cash. If going by the same purchase price for the 33% stake, PUC should fork out only RM107.2 mil for the remaining stake in Pictureworks. This works out to be 56% higher than what it paid for the same company just six months ago!

Interestingly, PUC is taking over Pictureworks from several vendors including its group managing director and CEO Cheong Chia Chou, who is a major shareholder of both PUC and Pictureworks.

What has changed in the short period to warrant a much higher valuation for Pictureworks? Granted that the deal comes with a profit guarantee of RM25 mil and RM28 mil for the financial years ending Dec 31, 2019 and Dec 31, 2020 respectively. But is the profit guarantee structured in a fair manner to PUC’s minority shareholders?

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