Broadway Industrial Group’s substantial shareholder, Lau Leok Yee, and non-independent non-executive chairman Lew Syn Pau, have agreed to sell their collective stake of 196,964,849 shares in the company to Patec Pte Limited for 19.7 cents apiece on Oct 28. The stake amounts to 43.32% of Broadway Industrial Group’s total stake.
Patec Pte Ltd is wholly-owned by Patec Precision Industry (Patec Taiwan), which is listed on the Taiwan Stock Exchange. Patec provides engineering solutions to the metal-forming industry and it has two business units, mainly engineering solutions and components manufacturing.
Per rule 14 of the takeover code, where a mandatory offer is triggered when an offeror acquires 30% or more of the shares in a company, Patec is required to make a mandatory conditional cash offer for all the shares it does not already own in Broadway Industrial Group.
The offer will be extended to all the shares unconditionally issued under the exercise of any outstanding options granted under the Broadway Industrial Group share option scheme and share plan in 2022. As at Oct 28, there are 10.3 million outstanding options granted under the share option scheme and 2.6 million outstanding awards granted under the share plan.
The offer will be conditional upon Patec receiving 50% or more of the shares in Broadway Industrial Group. As at Oct 28, Patec has $41.6 million comprising 36,841,490 shares.
Patec’s offer price of 19.7 cents represents a premium of around 27.1%, 7.1%, 3.1% and 3.7% over the volume weighted average price (VWAP) per share for the 12-, six, three and one-month periods respectively.
In the offer document, Patec says it intends to ensure continuity of Broadway Industrial Group’s operations. It also intends to undertake a review of the operations, the latter’s management and financial position and to “evaluate various options or opportunities which may present themselves which it regards to be in [its] interests”.
In addition, Patec will look at opportunities to restructure and optimise Broadway Industrial Group’s business operations to integrate them with those of Patec after the offer.
“The acquisition and the offer represent an opportunity for [Patec] to acquire control of a manufacturer of precision-machined components with manufacturing footprints in Thailand, China and Vietnam, and thus allows the Patec group to expand its product and service offerings. The offeror believes that if the offer is successful, it will be able to leverage on the combined expertise to innovate and develop higher value products,” reads the offer document.
See also: Broadway Industrial Group offer turns unconditional; offer will now close on Dec 23
Following the offer, Patec intends to make Broadway Industrial Group its wholly-owned subsidiary and it does not intend to keep Broadway Industrial Group’s listing.
As at 1HFY2024 ended June 30, Broadway Industrial Group reported earnings of $8.7 million, reversing from a loss of $1.2 million in the corresponding period the year before. Its earnings per share (EPS) stood at 1.92 cents on a diluted basis while its net asset value (NAV) per share stood at 21.3 cents.
Shares in Broadway Industrial Group last traded at 18.4 cents before its trading halt on the morning of Oct 28.
