Singapore-based investment holding company UMS Holdings Limited (UMS) is making a mandatory conditional cash offer to acquire the remaining issued and paid-up shares of its associate company SGX Catalist Board-listed JEP Holdings Limited (JEP).
The acquisition will be made via purchase of a stake in Ellipsiz and the deal size is pegged at S$6.58 million ($4.81 million).
Ellipsiz, a local-based electronics company specialising in distribution and testing of probe cards, currently owns about 10.9 per cent of JEP.
UMS, listed on Singapore Exchange (SGX) Mainboard, first acquired a 7.48 per cent stake amounting to 109 million shares in JEP, a precision engineering company, for S$5.7 million, or S$0.05233 per share on January 15 2018.
This was followed by another acquisition of 320 million shares on the next day at S$0.07 per share, or S$22.40 million. The two acquisitions were done via “married” deals.
Another 864,300 shares at an average price of S$0.0687 per share or approximately S$59,377 were acquired in the open market. Following the conclusion of the three transactions, UMS became a substantial shareholder in JEP with a 29.5 per cent stake since January 17, 2018.
Cut to 2019, as of May 13, 2019, UMS owns approximately 111.75 million ordinary shares or approximately 27.9 per cent in JEP.
The latest offer made by UMS on May 13 will be done via a “married” deal of 43.84 million sale shares from SGX-listed Ellipsiz Ltd. For the uninitiated, a married deal refers to an off-the-market share transaction between two parties on a mutually agreed price.
The offer price of S$0.150 per sale share represents a discount of approximately 3.8 per cent over the last transacted price of S$0.156 per share as on May 10, 2019. Post-acquisition, UMS’s shareholding interest in JEP will increase from 27.9 per cent to 38.8 per cent. As a result, the acquisition triggers a mandatory cash offer for the rest of the shares of JEP, though offer will become unconditional if UMS receives, by the close of the offer, valid acceptances for it to control more than 50 per cent of JEP’s entire share capital.
UMS will also make an offer to acquire all the outstanding warrants issued by JEP. The warrants offer will be unconditional in all respects. The offer price for each warrant will be S$0.074.
UMS currently has no intention to delist JEP, but added that it maintains the flexibility to assess its options in the event the public float falls below ten per cent.
Following the announcement of the acquisition offer on May 13, the stock price of JEP jumped by S$0.016 or 10.26 per cent to S$0.172. However, JEP’s stock price slumped the next day, May 14, by S$0.019, or 5.88 per cent to S$0.153 as of 11:12 am (Singapore time). Approximately 784,000 JEP shares changed hands during the trading session on May 14, and the total market capitalisation stood at S$62.58 million.
The price of JEP warrants expiring on December 20, 2019 went up by S$0.001 or 1.37 per cent at S$0.074, in line with the offer price.
UMS’s stock price took a different turn, and was up by S$0.035, or 5.69 per cent to trade at S$0.65 as of 11:12 am (Singapore time) on May 14. There were approximately 2.97 million shares changed hands during the trading session. The market capitalisation of UMS is approximately S$348.68 million.