Should You Accept the Cash Offer for Broadway Industrial? Key Insights and Analysis

The closing date of the offer from Patec Group is now 5.30 pm on Dec 23

THE mandatory cash offer made by engineering solutions provider Patec Group to acquire all the shares of manufacturer Broadway Industrial Group has turned unconditional in all respects.

 

As at 6 pm on Thursday (Nov 14), the total number of shares owned, controlled or agreed to be acquired by the offeror and persons acting in concert with it &ndash together with valid acceptances of the offer &ndash amounted to 54.5 per cent of the total number of shares of Broadway Industrial.

 

This represents 53 per cent of the maximum potential issued share capital of Broadway Industrial.

 

As this has exceeded 50 per cent of the voting rights attributable to the maximum potential share capital of Broadway Industrial, the offer has been declared unconditional in all respects.

 

The closing date of the offer has been extended to 5.30 pm on Dec 23.

 

Patec Group made a mandatory conditional cash offer to take Broadway Industrial private at S$0.197 in cash a share on Oct 28.

 

The group had acquired some 197 million Broadway shares from the company&rsquo s non-executive director Lew Syn Pau and Lau Leok Yee, representing 43.3 per cent of the company&rsquo s share capital, excluding treasury shares.

 

The purchase triggered the mandatory conditional cash offer for all of Broadway&rsquo s shares, excluding treasury shares and those already owned, controlled and agreed to be acquired by Patec. Prior to this, Patec did not own or control any Broadway shares.

 

Patec Group intends to make Broadway its wholly owned subsidiary

 

ENGINEERING solutions provider Patec Group has made a mandatory conditional cash offer to take Broadway Industrial Group private at S$0.197 in cash a share, it was announced on Monday (Oct 28).

 

The offer comes after Patec acquired some 197 million Broadway shares from the company&rsquo s non-executive director Lew Syn Pau and Lau Leok Yee. These shares represented about 43.3 per cent of the company&rsquo s share capital excluding treasury shares.

 

Prior to the acquisition, Patec did not own or control any shares. Thus, this recent purchase triggered the mandatory conditional cash offer for all Broadway&rsquo s shares, excluding treasury shares and those already owned, controlled and agreed to be acquired by Patec.

 

An announcement by UOB, who is the financial adviser to Patec, said that if any distributions were paid after the date of the announcement, Patec can reduce the offer price by the amount of the pay-out.

 

The offer price of S$0.197 a share represents a 7.5 per cent discount to Broadway&rsquo s net asset value of S$0.213 as at Jun 30, according to the company&rsquo s last published financial statements

 

It is 7.1 per cent higher than the counter&rsquo s last transacted price of S$0.184 on Oct 25, the last full trading day before the offer announcement.

 

The offer price also represents a premium of about 27.1 per cent, 7.1 per cent, 3.1 per cent and 3.7 per cent over the 12-month, six-month, three-month and one-month volume weighted average prices, respectively, up to the last trading day.

 

The offer is conditional upon Patec receiving valid acceptances, which will result in the offeror and concert parties holding more than 50 per cent of Broadway at the close of the offer.

 

UOB noted that the offer provides shareholders with an opportunity to &ldquo realise their investment in the shares at a premium over the historical trading prices&rdquo , without incurring brokerage and other trading costs.

 

The offer allows Patec to expand its product and service offerings in the region, said the financial advisor. This is because Broadway manufactures precision-machined components and has businesses in Thailand, China and Vietnam. It also operates in South Korea and is headquartered in Singapore.

 

Listed on the Singapore Exchange&rsquo s mainboard in 1994, Broadway also sells, distributes precision components and parts, as well as provide after sales services, among other segments.

 

UOB also said Patec intends to make Broadway its wholly owned subsidiary and &ldquo does not intend to preserve (its) listing status&rdquo .

 

Patec currently intends to ensure Broadway&rsquo s operations continue after the deal. It also wants to undertake a review of the operations, management and financial position of Broadway.

 

The offeror will also restructure and optimise the business operations of Broadway to integrate them with those of the Patec group post-offer, said UOB, who also cautioned that such initiatives may involve &ldquo significant capital expenditure&rdquo .

 

Shares of Broadway Industrial Group : B69 +6.52% ended Friday flat at S$0.184, before it requested a trading halt on Monday morning.

did notice he was buying when price was down with negative news

' Lew Syn Pau, the non-independent and non-executive chairman of Broadway Industrial Group, has raised his stake in the company in recent days.

Lew, a former member of parliament, started buying on Nov 24, acquiring 236,1000 shares on the open market at 8.04 cents each. On Nov 27, he bought another 195,700 shares, paying 8.09 cents each. On Nov 28, Lew acquired 111,3000 shares at 8.2 cents each.

The most recent was on Nov 29 when he acquired 456,900 shares at 8.9 cents each. This brings his total stake in the company to nearly 45.98 million shares or a 10.11% stake.'