An offer from Kulim Berhad, a 49 per cent shareholder in New Britain Palm Oil (NBPO), to snap up a further 20 per cent stake in the company has been rejected by New Britain's directors - but that doesn't mean shareholders have to follow suit.
Kulim has offered to buy 30m shares in New Britain at 550p, a 17 per cent premium to the current share price of 470p. An independent review has unsurprisingly concluded that the offer isn't fair or reasonable as it "significantly undervalues" New Britain's shares and may "materially reduce trading liquidity", which could result in a lower share price and a delisting from the London Stock Exchange.
We don't agree. The offer gives shareholders an opportunity to dispose of at least some of their holdings at a significant premium. If readers followed our buy tip back in May (414p, 30 May), and were to tender the shares to Kulim at 550p, that would equate to a 32 per cent return over just two-and-a-half months. Investors could also sell at the offer price, only to buy in again at the lower market price.
Meanwhile, the half-year results showed disappointing production volumes and a decline in revenue and profit, due to heavy rainfall and lower selling prices.
