Tong Herr receives assessment of privatisation offer ahead of shareholder vote

Traders Union
All News
Financial News
Tong Herr privatisation vote

Highlights

Mercury Securities assessed the RM2.55-per-share privatisation offer to Tong Herr shareholders as 'unfair but reasonable' compared with the estimated value of RM4.13 per share.
The offer price represents a 34% premium to the last price before its announcement in August 2026 and is 37%-76% above average historical prices over periods ranging from five days to three years.
Mercury Securities warned that the share price could fall below the offer price if the proposal fails, while controlling shareholders hold a 74.5% stake and no alternative offer has emerged so far.

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

Independent assessment and offer details

As reported by The Edge Malaysia, the appointed independent adviser, Mercury Securities, said in its advice circular dated Monday that Tong Herr's privatisation offer is "unfair but reasonable" and urged minority shareholders to accept the proposal.

According to Mercury Securities, the RM2.55-per-share offer is considered unfair because it values Tong Herr below its estimated value of RM4.13 per share, while the company's latest unaudited net assets per share stood at RM3.44 as at 30 Jun. At the same time, the offer is deemed reasonable as it gives investors an opportunity to exit at a premium to historical prices, given that Tong Herr shares are thinly traded and difficult to dispose of in the market.

The Tsai family, as controlling shareholders, has proposed to take the bolt and nut manufacturer private through a selective capital reduction and repayment exercise. The offer price represents a 34% premium to the last price before the transaction was announced in August 2026, as well as gains of between 37% and 76% compared with average historical share prices over periods ranging from five days to three years.

Implications for minority shareholders

Mercury Securities also warned that if the proposal fails, Tong Herr's share price could fall below the offer price, making it more difficult for minority shareholders to sell their holdings at such levels in the future.

The firm also said no alternative offer has emerged so far, while the controlling shareholders already hold a 74.5% stake in Tong Herr, making any competing proposal difficult to succeed without their support. Tong Herr's non-interested directors also agreed with the assessment and recommended that shareholders support the privatisation at the extraordinary general meeting scheduled for 3 Nov.

In our earlier report on compensation for United Malacca minority shareholders, we discussed the Tee siblings' move to pay RM6.10 per share to investors who missed out on the mandatory general offer that should have been made after their stake exceeded the 33% threshold. The article also explained the claim requirements and the regulatory compliance implications when a mandatory general offer is not launched as required.

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.