The buyer is a wholly-owned subsidiary of Shanghai-listed Chinese state-owned enterprise Sinochem International Corp, which is involved in trading and manufacturing of chemicals, plastics, rubbers and metallurgy products. Sinochem is offering S$0.26 per share for GMG Global and is seeking to acquire 1.03 billion shares.
GMG Global owns and operates rubber plantations in Cameroon and the Ivory Coast and has rubber processing facilities in the Ivory Coast and Indonesia. The two majority shareholders, GMG Holding (HK) and Panwell, which collectively own 60.71% of the Singapore-listed firm, have agreed to sell enough shares to top up whatever stake reached through the tender of shares by minority shareholders to ensure that Sinochem reaches its 51% target.
The offer price of S$0.26 per share represents a 15.6% premium to the latest traded price of S$0.225 before the stock was suspended on Thursday, and a 49% premium to GMG Global's closing price on April 24, the day before it confirmed to the Singapore Exchange that it was in takeover discussions. Looking further back, the offer marks a premium of 58% to the volume-weighted average price for the one month preceding April 24 and 74% to the VWAP for a six-month period. It represents a price-to-earnings multiple of 23.9 times trailing earnings for calendar 2007.
The share price gained 6.7% to S$0.24 when it resumed trading on Friday.
GMG Global registered revenues of S$166.4 million for calendar 2007 on which it earned a net profit of S$22 million. The Sinochem group had revenues of S$3.8 billion for calendar 2007 on which it earned a net income of S$153 million.
Sinochem said the takeover is driven by its ambitions to become a leading global rubber producer and added that GMG will have greater access to the China market under SinochemÆs ownership. Sinochem intends to retain GMG Global's Singapore listing.
Sinochem is advised by ANZ. Alpha Advisory provided financial advice to GMG Global. The board of GMG has yet to appoint an independent financial adviser.
The deal follows soon after one of the largest ever acquisitions by a Chinese company in Singapore, which saw China Huaneng Group win the auction for Temasek-owned Tuas Power for a firm value of S$4.3 billion.
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