KUALA LUMPUR (May 4): An independent adviser has recommended Concrete Engineering Products Bhd (KL:CEPCO) shareholders to accept the RM2.60 per share takeover offer from YTL Corp Bhd’s (KL:YTL) YTL Cement Bhd, saying it is “fair” and “reasonable”.

The cash offer is deemed “reasonable” premised on Concrete Engineering shares’ relative illiquidity, and “fair” as it represents a premium to the concrete products maker’s revalued net assets (RNAV) per share, Mercury Securities Sdn Bhd said in an independent advice circular on Monday.

The RM2.60 price tag represents a 46.9% premium to Concrete Engineering’s RNAV per share of RM1.77, the independent adviser noted.

It is also a 122.2% premium to Concrete Engineering’s latest announced consolidated net asset value per share of RM1.17, and a premium of 39% to 96.2% to the shares’ five-day to one-year volume-weighted average market price (VWAP).

On trading liquidity, Concrete Engineering shares have a simple average monthly trading volume to free float shares of 0.53% as compared to the Bursa Malaysia Industrial Production Index’s 7.1%.

Anchored on this view, Mercury Securities recommended that Concrete Engineering shareholders accept the offer.

YTL Cement’s mandatory takeover offer was triggered in April after the acquisition of a 53.49% stake in Concrete Engineering for RM103.79 million from a number of vendors. 

Vendors included Inch Kenneth Kajang Rubber PLC (KL:INCKEN), Datuk Dr Che Muhamad Fasir Samsudin and his son, Muhammad Firdaus Muhamad Fasir. Inch Kenneth sold a 19.3% stake, Muhammad Fasir a 4.1% stake, and Muhammad Firdaus 4.7%. 

The offer formally kicked off on April 22. It will remain open until May 13, unless extended or revised.

At the noon break, shares in Concrete Engineering stood three sen or 1.16% higher at RM2.62, valuing the company at RM195.52 million.

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