In a significant development within Malaysia’s building materials sector, Signature International Bhd, a renowned kitchen cabinet manufacturer, has been presented with a conditional takeover bid from Chin Hin Group Bhd. This offer, disclosed on a recent Friday, seeks to consolidate Chin Hin’s position in the market by acquiring all remaining shares of Signature International that it does not already own, priced at 84 sen per share.
This move comes on the heels of Chin Hin acquiring an additional 4.77% stake in Signature International, elevating its total holdings, along with its persons acting in concert (PACs), to an impressive 33.49%. This acquisition has necessitated a conditional mandatory takeover offer, as detailed in a notice from AmInvestment Bank Bhd on behalf of Chin Hin.
Under the terms of this offer, Chin Hin is required to extend a bid to purchase all outstanding shares of Signature International at the stipulated offer price of 84 sen per share in cash. However, the completion of this takeover is contingent upon Chin Hin and its PACs securing at least 50% of Signature International’s voting shares, marking this offer as conditional upon meeting this acceptance threshold.
The proposed purchase price of 84 sen per share stands at a notable discount compared to the recent market performance of Signature’s shares. Specifically, this price reflects a 10.64% and 11.04% discount against the last traded price and the five-day volume-weighted average market prices (VWAPs) of Signature’s shares, which were 94 sen and 94.42 sen, respectively, as of March 27. Furthermore, this offer translates to discounts of 8.57% and 5.29% against the one-month and three-month VWAPs, and even more substantial discounts when considering the six-month and one-year VWAPs.
This takeover bid is not Chin Hin’s first foray into Signature International. The initial investment was made in March 2021 when Chin Hin purchased 80 million Signature shares at RM1.17 per share, totaling an investment of RM93.6 million. Further emphasizing its commitment to this strategic direction, Chin Hin has expressed intentions to maintain Signature’s listing status following the mandatory general offer (MGO), a stance supported by the majority of Chin Hin’s shareholders during an extraordinary general meeting (EGM) held on the same Friday as the takeover announcement.
The market responded positively to this announcement, with shares in Chin Hin climbing 21 sen or 4.82% to close at RM4.57, bringing the group’s valuation to RM8.09 billion. Similarly, Signature International saw its shares rise by three sen or 3.19% to 97 sen, reflecting a market capitalization of RM626.13 million, thereby highlighting the significant interest and potential impact of this proposed acquisition on both entities and the broader market.
