Background: Beyonics was listed on the Singapore Exchange in 1995. It is engaged in electronics manufacturing and precision engineering services in Asia, and has manufacturing facilities in Singapore, Malaysia, Indonesia and Thailand. The group is currently involved in a takeover by a private equity firm, Shaw Kwei & Partners Ltd (SKP).
Takeover offer: The proposed acquisition will be effected through a scheme of arrangement whereby all the company shares will be transferred to the acquirer. Shareholders will receive $0.26/share in cash. SKP intends to delist the company with the existing chairman and CEO continuing to be involved in the businesses.
Key ratios…
Price‐to‐earnings: na
Price‐to‐NTA: 0.5 cents
Dividend per share / yield: S$0.005/ 2.0%
Net cash/(debt) per share: S$0.02
Net cash: $12.19m
Share price S$0.245
Issued shares (m) 535.38
Market cap (S$m) 131.17
Free float (%) 79.98%
Recent fundraising activities May 2005: 1‐for‐4 rights issue of 120.3m rights shares @ $0.31
Financial YE 31 July
Major shareholders Chay Kwong Soon (15.9%); Goh Chan Peng (4.1%)
YTD change 19.51%
52‐wk price range S$0.155‐0.255
Our view
Fair deal for longsuffering shareholders? The company’s shares will be transferred to SKP fully paid and free from encumbrances. Given Beyonics’ cash position of $0.11/share, SKP is paying only $0.15/share and is getting the company at a steep discount of 47% to NAV. Arguably, the offer price is fair when the P/NAV is compared with that of the peer average of 0.48x and shareholders are given a chance to exit from a loss‐making company (FY Jul11 net loss: 3.26 cents/share). However, longsuffering shareholders may not yield to the offer; the stock price hit $0.595 at its peak in 2007.
Chance for a better deal? Approval by a majority of shareholders holding not less than 75% in the company shares is required for the scheme to go through. SKP has received irrevocable undertaking from key shareholders of only 19.98% of the total shares. In the event of a competing offer, SKP may set a higher consideration price, conditional upon an acceptance level of 50% of total shares.
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