PORTEK (Lim&Tan)

S$1.305-PORK.SI

􀁺 The timing of a research report on Portek saying it is worth $1.56 a share, is “most interesting”. (The valuation is based on the PE of giants like China Merchants, which has a market cap of US$9.4 bln against Portek’s S$199 mln.)

􀁺 ICTSI’s $1.20 a share offer (announced on Jun 1st) is the only offer on the table, and is due to close on July 26th unless extended. (A failed attempt would mean ICTSI holding onto a stake that has no strategic significance, and having to stay away from making another attempt for 6 months.)

􀁺 The independent directors of Portek have, in their July circular, concluded the $1.20 offer is “reasonably attractive”. and have advised minority shareholders to accept or sell in the market at higher price than $1.20. (The stock had hit $1.30 on Jun 29th.)

􀁺 A Third Party emerged on Jun 8th (ie more than 4 weeks ago) and has been in talks with Portek and its founding Chairman Larry Lam who owns 41% of the company. It is unclear why nothing has materialized after >4 weeks (is it because the 3rd party is not prepared to launch a general offer thereby allowing Lam to remain on the share register! Think of Jaya Holdings and its CEO Chan.)

􀁺 The 3rd party has been ordered by the SIC to declare its intentions by around Aug 11th.

􀁺 The most pertinent question today therefore is, will ICTSI raise its offer should Portek’s share price stay at current levels, thanks to the new research report, and sufficiently enough to entice Mr Lam to accept. (Every 10-cent raise will cost an additional S$15.2 mln.)