KUALA LUMPUR: Shares in Pentamaster Corp Bhd
slid by over 2% in early trade following news of its intention to privatise Hong Kong-listed Pentamaster International Ltd (PIL) for HK$158.5mil (RM92mil), or HK$0.93 (54 sen) per share.
The automation manufacturing and technology solutions provider fell 2.85%, or 12 sen, to RM4.09 at 10.07 am, making it the third-largest decliner on Bursa Malaysia.
Pentamaster currently owns 63.9% of PIL, a company listed on the main board of the Hong Kong Stock Exchange.
Under the proposed privatisation, Pentamaster and its partner Puga Holdings Ltd will acquire 7.1% and 29% stakes, respectively, in the HK unit at HK$0.93 per share (RM0.54), a 16.25% premium over its last traded price of HK$0.80 (RM0.46).
PIL will also declare a special dividend of HK$0.07 subject to shareholder approval at an EGM which will take the total return to minority shareholders to HK1 per PIL share.
RHB Research noted that the cash consideration will total HK$158.5mil (RM91.8mil), at HK$0.93 per share, and will be financed by internal resources.
“This acquisition will not strain the group’s balance sheet, in our view, given its healthy operating cash flow and net cash position of RM466.7mil as of 3Q24.
“The offer price represents a premium of 16.3% over the last traded price of HK$0.80 or 39.7% over the average price for the past six months,” the research house said.
PIL will also declare a special dividend of HK$0.07, bringing the total consideration to HK$1 per share.
The long-stop date for the transaction is June 19, 2025, and the proposal requires approval from more than 75% of existing PIL shareholders at an upcoming EGM, along with other conditions.
RHB believes the planned delisting is strategically sound, with the remaining 29% stake to be acquired by Puga, a special purpose vehicle (SPV) backed by Achi Capital, a private equity firm specialising in semiconductor and technology investments in China.
Achi Capital's expertise and network are expected to drive PIL's growth and strengthen its market position.
The proposal also enables PIL to streamline operations and reduce compliance costs. Since PIL accounts for all of Pentamaster’s PAT, the 36.1% stake in PIL not owned by the group is currently recorded as a minority interest in Pentamaster’s financials.
“Acquiring an additional 7.1% stake will result in a circa.12% increase in Pentamaster’s earnings per share, making the acquisition earnings-accretive,” RHB said.
“While we have factored in the earnings boost from the additional
stake in PIL, our FY24F-26F earnings are adjusted by -2.5%, 0.4%, and 3.9%, slightly offset by lower topline assumptions due to the delayed recovery in the automotive sector,” it added.
