THE Minority Shareholders Watch Group (MSWG) has praised the professionalism of the team involved in the recent privatisation exercise of MMC Corp Bhd (MMC) for being tight-lipped during the entire process, hence curbing the likelihood of insider trading prior to the announcement date.
“Kudos to those involved in the privatisation who maintained secrecy of the offer price and who managed to mitigate the leakage of the offer price; this is only fair to the unsuspecting minority shareholders,” the shareholder activism group’s CEO Devanesan Evanson told FocusM.
“As to the offer price itself, it does look attractive but let us wait for the recommendations of the independent advisors.”
To re-cap, tycoon Tan Sri Syed Mokhtar Albukhary had proposed to take MMC Corp private via selective capital reduction at RM2 per share. The closing price of MMC prior to this announcement was RM1.30.
As the RM2/share offer price is a whopping 54% higher than last traded share price of RM1.30/share, analysts have urged MMC Corp’s shareholders to accept company’s cash offer which is deemed very attractive.
“The difference of 70 sen between the offer price of RM2.00 and the last closing price of RM1.30 indicates that there was not much leakage as to the offer price,” observed Devanesan.
“Typically, what one would have expected was for the share price to inch upwards closer to the offer price before the offer was announced. This is done by insiders with inside information.”
This is unfair to minority shareholders as it creates an unlevel playing field – the insiders trading with insider information and the outsider minority shareholders trading without such information.
“It is inevitable that quite a few people will have the inside information like the directors, management and the professionals working on the deal; therefore, their credibility and professionalism are important to ensure that there are no leakages of the offer price,” asserted Devanesan.
Using such inside information to trade is a capital market offence and the Securities Commission (SC) has been vigilant to act on such insider trading.
MMC closed today’s trading limit up at RM1.69, rising 39 sen or 30% with 2.6 million shares traded, thus valuing the company at RM5.15 bil. – June 4, 2021
Photo credit: The Malaysian Reserve
