KUALA LUMPUR: Shares of Chemical Company of Malaysia Bhd (CCM) and Batu Kawan Bhd were traded higher today after the latter launched a RM292.8 million takeover offer for a 56.32 per cent CCM stake owned by Permodalan Nasional Bhd.
Some analysts deemed the offer price of RM3.10 as "very generous", with Hong Leong Investment Bank Bhd (HLIB) advising shareholders to accept it.
Batu Kawan was among Bursa Malaysia's top six gainers after edging up 1.9 per cent or 30 sen to close at RM16.12 with just 17,500 shares traded.
The counter was traded higher in the early session. At 11.31am, it rose 36 sen to an intra-day high of RM16.18 with 11,300 shares changing hands.
CCM share price, meanwhile, rose more than seven per cent in the early trade over its Tuesday's closing of RM2.79.
The stock ended the day 7.2 per cent higher to RM2.99, hitting a high of RM3.01 and a low of RM2.93, with 25.03 million shares traded.
CCM shares have climbed steeply since mid-October on rumours that PNB was mulling over divesting its stake.
HLIB analyst Low Jin Wu said Batu Kawan had made a very generous offer as the RM3.10 far exceeded its previous CCM target price of RM1.47.
"We advise investors to accept the offer at RM3.10. CCM's financial performance was already subdued before the Movement Control Order due to weak chlor-alkali product demand and prices.
"Despite seeing an uptick in demand for its polymer division, its average selling price (ASP) has remained lacklustre due to competition as a result of low barriers to entry," Low said.
HLIB believes that the acquisition would be synergistic to Batu Kawan as it was largely involved in the manufacturing and distribution of chemical products.
Low said Batu Kawan was more diversified than CCM and most of the chemicals manufactured by it were similarly manufactured and distributed by the latter.
"We believe that the potential acquisition would offer economies of scale for Batu Kawan as it would have about 85 per cent of the caustic soda market share upon acquisition of CCM," he said.
PNB, in its announcement on Tuesday, said the RM3.10 represented a 69 per cent premium to CCM's three-month volume weighted average share price.
The sale will trigger a mandatory general offer for the remaining shares in CCM, although Batu Kawan said it intended to maintain CCM's listing.
