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Quick take: Cycle & Carriage jumps 29% on privatisation offer

KUALA LUMPUR: Shares in CYCLE & CARRIAGE BINTANG BHD (CCB) jumped over 29% in early trade Tuesday on news that its controlling shareholder is planning to take it private.

The Mercedes-Benz dealer, is the top gainer on Bursa Malaysia, rising 29.46%, or 38 sen to RM1.67 with low volume of 12,200.

CCB’s controlling shareholder Jardine Cycle & Carriage Ltd (Jardine CCL) has proposed to the board to undertake a selective capital reduction and repayment (SCR) at RM2.20 per share.

The cash repayment will amount to RM90.64mil, which represents a premium ranging from 44.24% to 75.52% above the prevailing market price of CCB shares.

CCB said the proposed SCR presents entitled shareholders with a clean cash exit opportunity to realise their entire holdings in CCB shares at a premium over the market price of the company as at the latest practicable date (LPD) without incurring brokerage fees.

As at Nov 8,2019, being the LPD, CCB had an issued share capital of RM124.60mil comprising 100.74 million CCB shares, of which JCCL holds 59.54 million, representing approximately 59.10% of the issued share capital of CCB.

The company added that the rationale for the SCR was in light of the challenging trading environment.

The company also said the listing status of CCB has brought minimal benefits, given that it had not undertaken any fundraising activity from the capital market over the past 15 years.

Affin Hwang Capital Research said the privatisation exercise is a good opportunity for CCB’s shareholders to exit their investment.

“We deem the offer price of RM2.20 per share attractive, considering that CCB is still loss making and likely to continue facing a challenging retailing environment in the next few years. We upgrade our target price and rating to reflect the privatisation offer, ” Affin said.

It has upgraded CCB to “buy” rating fromSell with a target of RM2.20, which is on par to the JCC’s offer price.

Source: TheStar