United Malacca receives delayed mandatory takeover offer, raising questions over compliance with shareholding threshold

Traders Union
All News
Business & Wealth
Companies
United Malacca takeover offer

Highlights

The Tee family and parties acting in concert crossed United Malacca’s 33% shareholding threshold in September 2024, but only made the RM6.10-per-share mandatory general offer last week.
Analysts, including Kenanga Research and CIMB Securities, say the RM6.10 offer does not reflect the RM7.45-per-share net asset value or the estates’ potential, with a consensus buy rating and target price of RM6.89.
After the takeover, the Tee family and its associates will hold around 46% of United Malacca, making privatisation unlikely, while its Bursa Malaysia listing will remain.

This article was translated from the original. Read the original version by our correspondent here.

Shareholding threshold breach and delayed offer

As reported by The Edge Malaysia, major shareholders of United Malacca comprising the Tee family of Prosper Group and parties acting in concert crossed the 33% shareholding threshold in September 2024, but only made a mandatory general offer, or MGO, last week.

In addition to offering RM6.10 per share, Prosper Group founder and Tee siblings Kim Tee @ Tee Ching Tee and Tee Cheng Hua also pledged to compensate eligible former shareholders who sold their shares below the offer price during the specified period. Under the arrangement, a shareholder who sold 100,000 shares at RM5.50 each, for example, could claim RM6,000 based on the 60 sen-per-share difference, excluding broker fees, stamp duty and other transaction costs.

An investment banker who spoke to The Edge Malaysia on condition of anonymity said the offerors may have overlooked the shareholdings of certain parties acting in concert when calculating their collective interest in United Malacca. Under the Capital Markets and Services Act 2007, such parties may include family members and related companies that are presumed to be acting in concert unless proven otherwise.

United Malacca chairman Datin Paduka Tan Siok Choo declined to comment when contacted and suggested that enquiries be directed to Prosper Group. Two days after the takeover notice, United Malacca also announced in a Bursa Malaysia filing the death of Prosper Group executive director Datuk Seri Tee Lip Sin, 55, on 14 October; he was the son of Tee Ching Tee.

Offer valuation and implications for investors

Analysts have so far advised investors not to rush into accepting the RM6.10 offer, saying that the price does not fully reflect the plantation company’s asset value and earnings prospects. Kenanga Research maintained its “outperform” rating with a RM7 target price, while CIMB Securities Sdn Bhd described the offer as unattractive, as it represents a premium of only 2.2% to the closing price before the announcement.

According to CIMB Securities analyst Ivy Ng Lee Fang, the offer values the company at 8.8 times its historical price-to-earnings ratio for financial year 2026 and 0.81 times its price-to-net-asset-value ratio. She said the price also does not fully account for the potential value of United Malacca’s estates in Melaka, Negeri Sembilan and Segamat, Johor, covering a combined 2,834 hectares, as well as its net cash position of RM312.8 million, or RM1.59 per share, which supports its balance sheet.

The Minority Shareholders Watch Group has also urged shareholders to wait for an independent adviser’s valuation before making a decision. All four analysts tracked by Bloomberg currently have buy recommendations on the stock, with a consensus target price of RM6.89.

On ownership, the investment banker quoted said a privatisation remains uncertain because the Tee family and parties acting in concert will hold only around 46% after the takeover. The offerors have also stated their intention to keep United Malacca listed on Bursa Malaysia’s Main Market.

United Malacca’s net asset value per share stood at RM7.45 as at 31 July 2026, slightly up from RM7.44 a year earlier. For the first quarter ended 31 July 2026, the group’s net profit fell to RM31.8 million from RM37.8 million a year earlier, while revenue declined 6% to RM180.1 million, according to a Bursa filing.

Previous cases on Bursa Malaysia

Delays in implementing an MGO like this are rare, but not without precedent on Bursa Malaysia. One example cited is the case of Subur Tiasa Holdings Bhd, in which Tiong Toh Siong Enterprises Sdn Bhd made an unconditional mandatory takeover offer in September 2021, even though the MGO trigger had occurred more than a year earlier, in February 2020.

In that case, independent adviser DWA Advisory recommended that shareholders reject the offer, deeming it unfair and unreasonable compared with higher valuation estimates. Subur Tiasa remained listed afterwards, while the rate of compensation claims by shareholders is unknown.

Another, older case involved IOI Corp Bhd and its major shareholder in Palmco Holdings Bhd, now known as IOI Oleochemical Industries Bhd. They crossed the 33% threshold in March 1997 but did not make an MGO, before the Securities Commission Malaysia ruled in February 1999 that an offer had to be made; their appeal was later dismissed and they were also publicly reprimanded.

IOI Corp eventually launched a competing offer in July 2001 following Sime Darby Bhd’s surprise bid for Palmco. Palmco was subsequently delisted in 2005, while a lawsuit by former minority shareholders over the failure to make an MGO was eventually dismissed by the High Court in May 2011, with the decision upheld by the Court of Appeal in November 2013.

In our earlier article on United Malacca’s mandatory general offer (MGO) at RM6.10 per share, we examined how the offer was triggered after the shareholding crossed the 33% threshold and why it was only made later. We also explained the planned cash compensation scheme for shareholders who sold below RM6.10 during the specified period, and reported the death of executive director Datuk Seri Tee Lip Sin while the takeover process was under way.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.