Cheers for BSTEAD 2771 BOUSTEAD HOLDINGS BHD shareholders after privatisation offer finally came from LTAT. But should shareholders hold out for more?

 Cheers for  BSTEAD 2771 BOUSTEAD HOLDINGS BHD shareholders after privatisation offer finally came from LTAT. But should shareholders hold out for more?



Finally, after 3 long years of waiting, Lembaga Tabung Angkatan Tentera (LTAT) has made its move to take Boustead Holdings Bhd private.


This time, LTAT is offering 85.5 sen each for shares it does not already own in Boustead Holdings.


Based on the number of outstanding shares, the armed forces pension fund is expected to fork out RM703.25 million for the deal.


The offer price is at a 30.5% premium over the last traded price of Boustead shares at 65.5 sen prior to the announcement on March 2. The premium is higher at 36.8% over March 1’s closing price of 62.5 sen.


While the offer price may seem really attractive especially for those who bought the shares at the levels prior to the announcement, it is at a steep discount of 52% over Boustead’s net asset per share of RM1.64 and 42% discount over its NTA of RM1.50.


This means Boustead, once taken private can ‘do as it wishes’ as it will no longer be under public eye as much.


The Group can also sell off its assets and make a handsome gain on the sale.


The offer came on the heels of its large quarterly loss of RM402 million, dragged down by the massive RM552 million impairment of unsold Covid-19 vaccines at its pharmaceutical unit Pharmaniaga Bhd.


That said, investors who bought Boustead shares on strong rumours of this privatisation exercise 3 years ago would be more than happy to cash out at a good premium.


Recall that in 2021, it was announced that LTAT had decided to kill the plan to take Boustead Holdings Bhd private as it was plagued by uncertainties due to prolonged Covid-19 measures.


The armed forces fund clarified the decision was deemed necessary due to uncertainties to its key businesses under Boustead Group (banking, hotels, property and retail petroleum) impacted by Covid-19.


Boustead Holdings owns a 52% stake in Pharmaniaga and a 64.99% stake in Boustead Heavy Industrial Corp Bhd.


On top of that, it also owns a 57.42% stake in Boustead Plantation Bhd and 20.93% stake in Affin Bank Bhd.


The group is also the controlling shareholder of BNS with a 68.85% stake.


Notably, Boustead's 20.93% stake in Affin Bank is worth RM987.8 million based on the bank's market capitalisation of RM4.72 billion. This asset alone is more than the amount that LTAT needs to pay for the privatisation.


Besides, the group's 57.42% stake in Boustead Plantation is valued at RM945 million based on market capitalisation of RM1.65 billion.


The Group has been dragged by huge debts, and it hogged the limelight for the wrong reasons over the past year. Prior to that, its unit Boustead Naval Shipyard Sdn Bhd (BNS) was probed by the government on the contract to build six littoral combat ships but were not delivered.


The recent privatisation offer for Boustead has certainly lifted the mood for long time Boustead shareholders.


However, it remains to be seen whether its independent auditor would recommend shareholders to accept or reject the offer as shareholders might want to hold out for better price given the attractive net asset per share.
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