Takeover price for Sunningdale Tech raised to S$1.65 per share in final offer

SUNNINGDALE Tech's chairman Koh Boon Hwee and Novo Tellus PE Fund 2 on Tuesday raised their offer price for the precision plastic components manufacturer to S$1.65 per scheme share, up 6.5 per cent from S$1.55 previously.

The move comes after activist investor Quarz Capital Management said in a statement last week that the proposed takeover price was "too low" and "significantly undervalues" the company.

Quarz, which advises entities that collectively own more than 6 per cent of the shares of Sunningdale, argued that the initial takeover price proposed at S$1.55 per share is at a significant discount of more than 22 per cent to Sunningdale's book value of close to S$2 per share.

With the revised and final offer, scheme shareholders can choose between receiving S$1.65 in cash per share, or 1,650 shares in Sunrise Technology Investment Holding (Cayman), the holding company of the offeror, at S$0.001 each.

Sunningdale and offeror Sunrise Technology Investment Holding said in a joint statement that the final offer of S$1.65 per scheme share represents a 42.6 per cent premium over the volume-weighted average price of the Sunningdale shares for the last year.

They also said the final offer provides a premium greater than any closing price of Sunningdale’s shares in the 12-month period prior to and including Sept 9, 2020 - the date the company announced a possible transaction involving its shares. 

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The final offer also represents a premium ranging between 23.1 per cent and 120 per cent to the closing prices of Sunningdale’s shares in the same period, they added.

The offeror plans to delist Sunningdale should the scheme become effective and binding. Mr Koh's entity, Sunrise Technology Investment Holding II, and a subsidiary of Novo Tellus PE Fund 2 hold a 64 per cent and 36 per cent stake respectively in the offeror company.

Mr Koh currently owns 15.61 per cent in Sunningdale. Yarwood Engineering & Trading, businessman Sam Goi, and chief executive officer Khoo Boo Hor have given an irrevocable undertaking to the offeror to vote in favour of the scheme. They hold a total of 18.1 per cent of Sunningdale in all.

Amid the global Covid-19 pandemic combined with US-China trade tensions, Sunningdale and the offeror said customers are managing risk actively by adjusting supply chains away from a concentrated production in Asia towards more diversified regional and local production worldwide.

The offeror is of the view that Sunningdale will need to make significant long-term investments to diversify and increase its manufacturing footprint beyond Asia - which will likely result in substantial upfront cash outlay that may generate little near-term payoff.

This in turn may increase the likelihood of more volatility to earnings and free cash flow generation over the near term.

As a result of the company's changing risk profile, the offeror believes the proposed privatisation will allow the company the necessary flexibility to optimise its resources and allow it to make strategic, long-dated decisions to protect the long-term competitiveness of the business. 

Shares of mainboard-listed Sunningdale were trading 3.9 per cent or S$0.06 higher at S$1.62 as at 11.48am on Tuesday, after the company lifted a trading halt it called for on Monday.

READ MORE: Sunningdale latest to face activist investor Quarz