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Minority shareholders block $183m buyout of Challenger

This article is more than 12 months old

Minority shareholders, disgruntled at what they regarded as a cheapskate offer for their stock, shot down a $183 million buyout of local IT retailer Challenger at a meeting yesterday.

The investors, representing 11.4 per cent of voters present, rejected the offer price of 56 cents a share.

Because the level of opposition was above 10 per cent, it was enough to stymie the buyout despite 88.6 per cent of those present and voting at the extraordinary general meeting (EGM) backing it.

The remarkable outcome - one rarely seen in corporate Singapore - means the exit offer will lapse and the offerors will not be able to make another bid for 12 months.

Challenger chief executive Loo Leong Thye, who was part of the buyout team, said after the vote that he respected the shareholders' decision and appreciated support for the company.

Mr James Hay, director of fund manager Pangolin Investment Management - which has long argued against the buyout - said he was delighted.

He believes his company made a difference, in part as it rallied minority shareholders to reject the deal.

"The offer was way too low, and it just kind of upset people," he said after the EGM in Challenger TecHub attended by about 70 shareholders.

Challenger said on March 20 that it intended to delist, with Digileap Capital - a partnership between Mr Loo and his family and Dymon Asia Private Equity - making a cash offer of 56 cents a share.

This valued the company at $183 million.

Mr Ng Leong Hai and four members of the Loo family, including Mr Loo, hold 78.64 per cent of shares and backed the delisting.

But investors, including Pangolin, questioned if the exit offer was "fair and reasonable" as assessed by independent financial adviser Deloitte & Touche Corporate Finance.

- THE STRAITS TIMES

BUSINESS & FINANCE