Japan’s Ajinomoto Co Inc will take its Malaysia-listed unit private at RM20 per share, representing a 31.6% premium over its last traded price of RM15.20.
In a Bursa Malaysia filing, Ajinomoto (Malaysia) Bhd (KL:AJI) said the privatisation exercise, valued at RM603.4 million, will be carried out via a selective capital repayment.
As at March 31, Ajinomoto Malaysia held cash of RM74 million, equivalent to about RM1.23 per share. Based on a preliminary estimate, the Japanese parent is expected to inject more than RM500 million to fund the transaction.
The company said the exercise will be funded through its excess funds, with the remaining portion to be financed by the parent company. However, no detailed breakdown was disclosed.
The board of Ajinomoto Malaysia, excluding conflicted directors, will deliberate on the proposal and determine the next course of action. If completed, Ajinomoto Co does not intend to maintain the listing of Ajinomoto Malaysia, which is primarily involved in food seasonings, including monosodium glutamate (MSG).
Ajinomoto Co currently holds a 50.38% stake, or 30.63 million shares, in the Malaysian unit. The privatisation will involve acquiring the remaining 30.17 million shares, or 49.62% interest, via a selective capital reduction and repayment exercise.
Under the proposal, the group will pay RM603.4 million in total at RM20 per share to cancel the minority shareholding. As at June 22, Ajinomoto Malaysia had an issued share capital of RM65.1 million comprising 60.8 million shares.
As at end-March, the group had RM74.24 million in cash and bank balances and about RM273.5 million in liquid investments. Retained earnings stood at around RM805 million, against total equity of RM867.6 million. It has no material borrowings aside from lease liabilities of about RM5.16 million.
To facilitate the transaction, Ajinomoto Malaysia will first issue 571.1 million bonus shares, as the proposed repayment exceeds its existing share capital. However, these shares will not be credited to shareholders or listed.
The subsequent capital reduction will see all minority-held shares, along with the bonus shares, cancelled.
Ajinomoto Co said the offer provides shareholders an attractive exit opportunity given the company’s historically low trading liquidity, with average daily volume accounting for just about 0.13% of its free float.
It added that Ajinomoto Malaysia has derived limited benefit from its listing status, as it has not raised funds from the capital market for over a decade while still incurring listing-related costs.
The proposal requires approval from at least 75% of votes cast by independent shareholders, with dissenting votes not exceeding 10%, along with other regulatory approvals. Trading in the stock will resume at 9am on Tuesday.
