Tong Herr adviser backs RM2.55 privatisation offer despite valuation shortfall
Mercury Securities values the company at RM4.13 per share, but says limited trading and a premium to past prices support accepting the offer.
Minority shareholders of Tong Herr Resources Bhd should accept the proposed RM2.55-per-share privatisation offer, independent adviser Mercury Securities recommended. Its assessment found the terms unfair on valuation grounds, but reasonable as an opportunity for investors to exit.
The Tsai family, which controls the bolts and nuts manufacturer, proposes a selective capital reduction and repayment exercise to take Tong Herr private. Shareholders will vote on the proposal at an extraordinary general meeting scheduled for Nov 3.
Mercury Securities put Tong Herr’s value at RM4.13 per share, above the proposed payment. It also cited the company’s latest unaudited net assets of RM3.44 per share as at June 30.
The adviser said limited trading makes selling Tong Herr shares on the market difficult. The offer carries a 34% premium to the final traded price before the August 2026 announcement. Against historical average prices measured over periods from five days to three years, the premium ranges between 37% and 76%.
Mercury Securities cautioned that the shares could trade below RM2.55 if the proposal fails. It noted the absence of another offer and said the controlling shareholders’ 74.5% holding would hinder a rival proposal without their backing. Tong Herr’s non-interested directors endorsed the assessment and advised shareholders to support the deal.
