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German plastics component maker Balda has sold almost its entire remaining stake in TPK Holding through a “club-type” deal, raising a total of NT$5.8 billion ($194 million). The deal was driven by a reverse enquiry for the seller’s whole position and was launched and priced on Saturday Hong Kong time (June 30), allowing Balda to recognise the capital gain in the financial year that ended in June.
Details about the buyers weren’t publicly available, but a source described them as “long-term supporters” of TPK, a Taiwanese company that is a major supplier of touch screens to Apple.
Balda, through its subsidiary Balda Investment Singapore, sold close to 16 million TPK shares at a fixed price of NT$363 per share, which represented a discount of 2.9% to Friday’s close of NT$374. UBS was the sole bookrunner.
Balda’s stake in TPK drops to about 0.8% from 7.6% as a result of the transaction, although it will go back up to about 2% once it receives the dividend for the 2011 business year, which will be paid through a combination of cash and shares, Balda said in a statement issued on Sunday. The sale will not affect Balda’s right to the 2011 dividend since the stock went ex-dividend on Thursday last week.
The small portion of shares that the company didn’t sell over the weekend consists of shares that it has received as dividend during the past couple of years. It wasn’t able to sell these as Singapore, where the selling subsidiary is based, imposes a two-year withholding period on shares received as dividends.
But for all intents and purposes, Balda essentially exited the company, the source said. This should remove the overhang on TPK’s share price, which has existed since Balda said in May last year that it intended to sell its entire holding before the end of October 2011. While it didn’t managed to do so within its initial timeline, the company has described its TPK investment as “a shareholding without strategic significance”, leaving investors in no doubt that it would return to the market at some point.
Balda did sell 20 million shares in late February, raising $318 million. That sale, which was arranged by J.P. Morgan and reduced Balda’s stake in TPK to 7.6% from 16.1%, was also done through a semi-private transaction and the shares were placed with just a small number of accounts. There was no information about the price investors paid at the time, but Balda sold the shares to J.P. Morgan at a 2.9% discount to the latest close.
Adjusted for a 2011 dividend that will comprise approximately NT$20 per share in cash and NT$3 per share in new shares, TPK’s share price has fallen about 4% since the February sale, according to Bloomberg data.
Following this weekend’s transaction, TPK’s share price fell 1.7% to NT$367.50 on Monday, holding well above the placement price of NT$363. However, yesterday it fell another 1.5% to NT$362. This left the stock with a 24% gain since the start of the year, outperforming a rise of about 5% in the Taiwan Stock Exchange Weighted Index during the same period.
Balda’s share price climbed 7.9% to €5.17 on Monday in Europe.
The company said in the Sunday statement that the deal generated proceeds of about €150 million ($190 million) and as a consequence of the share sale it expects a significant profit at the group level for the short business year that ran from January to June 2012.
“This does not only enable us to pay our shareholders a highly attractive extraordinary dividend for the short business year 2012 but also extend our financial scope of actions for the ongoing reorganisation of the operative business of Balda.”
Balda also reiterated that the management board intends to sell the remaining TPK shares at “an optimised value” and to fully dispose of the company’s non-strategic investment in the Taiwanese company.
