Portek International

[cif5000]

This takeover offer will be exciting

I am actually thinking of Parkway (II).

[dydx]

Portek has just issued an announcement in response to ICTSI's GO.....
http://info.sgx.com/webcoranncatth.nsf/V...200330736/$file/Portek_Voluntary-Conditional-Cash-Offer_Announcement-01-06-2011.pdf?openelement
, and in the announcement Portek has said that the company will be appointing an IFA shortly to advise the directors on the GO.

It does look like ICTSI's GO is an unsolicited one, and I agree this takeover may turn out to be an exciting one. What is the likelihood of the emergence of (1) a possible white knight, or (2) a counter bid from another major player from the same industry, or Portek's directors not supporting the GO based on an opinion of the IFA.

Whatever that is to emerge, the GO has confirmed one key point for all Portek's shareholders: Their Portek shares are highly valuable, and Mr Market has been overly conservative until now!

[d.o.g.]

This is interesting. Lam Choon Seng owns 42%. Ooi Boon Hoe owns 2%, Tok Soon Chong 1%. Together the 3 directors have 45%. If they wanted to cash out they could have sold to ICT. So it is probably a hostile takeover.

Despite the nice words about employees contributing to the success of the company, it seems to me that ICT intends to kick them out. Otherwise it would have partnered with them to make a GO instead of going it alone.

Can Lam & Co find backers to outbid ICT? It will be pretty hard IMHO. Portek has been undervalued for years. They could have taken it private years ago if they could find the backers.

ICT is a strategic buyer able to make operational changes. So they can afford to bid more. Anyone willing to outbid ICT has to be able to make operational changes too - and that includes the potential removal of Lam & Co. If Lam & Co insist on staying on as a condition, they may not find many backers to help fend off ICT.

[nitro]

Congrats! Cash offer at $1.20.

Wow congrats dydx! I think this will buy many many good meals.

Sigh, another one which I missed. Oh well, back to the drawing board. I think I have to refine the way I evaluate companies. Always seem to keep missing the ones with fabulous GOs.....

there is an article 'how to find another Allgreen' from TheEdge magazine last Saturday, it uses EV/IC and FCF to sniff out potential M&A companies.

http://www.theedgesingapore.com/componen...n-cov.html

[pianist]

just wondering if PSA can be the possible white knight to save Lam & his Co from this aggressive and swift hostile takeover? As PSA is govt-linked, would existing port operations / concessions established with overseas authorities be a problem?

in any case, I am pleasantly happy to hear this news as a minority shareholder and look forward to the IFA report.

[portuser]

This is interesting. Lam Choon Seng owns 42%. Ooi Boon Hoe owns 2%, Tok Soon Chong 1%. Together the 3 directors have 45%. If they wanted to cash out they could have sold to ICT. So it is probably a hostile takeover.

Despite the nice words about employees contributing to the success of the company, it seems to me that ICT intends to kick them out. Otherwise it would have partnered with them to make a GO instead of going it alone.

Can Lam & Co find backers to outbid ICT? It will be pretty hard IMHO. Portek has been undervalued for years. They could have taken it private years ago if they could find the backers.

ICT is a strategic buyer able to make operational changes. So they can afford to bid more. Anyone willing to outbid ICT has to be able to make operational changes too - and that includes the potential removal of Lam & Co. If Lam & Co insist on staying on as a condition, they may not find many backers to help fend off ICT.

Kok Choong Wah (holding 1.83% of Portek shares) was with Bromma, an associated company of Portek before it was sold. Peter Michael Darley (holding 1.27%) was reported to have run Portek's terminal in Malta in recent years. Darley was a Board Director of Portek before he retired and stetttled in UK many years ago.
Lam Soon Onn (with 0.57%) is Larry's brother.
The combined shareholdings of three, Larry. Ooi and Tok is 49.08% of the toptal number of shares as at 17 Sep 2010. There were also anothrer 8.23m outstanding options under the Portek Employees' Share Option Scheme.
If this takeover is hostile, it is likely to fail.
ICT does not have an in-house engineering arm. If it succeeds in gaining control of Portek, Portek's engineering arm will help to reduce ICT's own terminals' downtimes.

[pianist]

just wondering what may happen to its share price in the event of a failed hostile takeover.
i was trying to recall any similar past cases, is colex a good case study?

[yeokiwi]

Kok Choong Wah (holding 1.83% of Portek shares) was with Bromma, an associated company of Portek before it was sold. Peter Michael Darley (holding 1.27%) was reported to have run Portek's terminal in Malta in recent years. Darley was a Board Director of Portek before he retired and stetttled in UK many years ago.
Lam Soon Onn (with 0.57%) is Larry's brother.
The combined shareholdings of three, Larry. Ooi and Tok is 49.08% of the toptal number of shares as at 17 Sep 2010. There were also anothrer 8.23m outstanding options under the Portek Employees' Share Option Scheme.
If this takeover is hostile, it is likely to fail.
ICT does not have an in-house engineering arm. If it succeeds in gaining control of Portek, Portek's engineering arm will help to reduce ICT's own terminals' downtimes.

That is assuming that those besides Lam's family are not enticed by the offer.
ICT did not mention that it will not up its offer anymore although it is likely to retreat if it cannot get enough stake in Portek to gain management control.

Looking at the buy price now, it is indeed a hostile takeover. I think there is room for upgrade of offer price.

It is a real pity if our home grown company is being dissected by a foreign company.
Is there any local White Knight around?

[portuser]

The key persons are unlikely to be enticed by the $1.20 offer. They know that terminal businesses are cash cows.

[dydx]

Based on the latest H1(ended 31Dec10)-FY11 results announcement.....
http://info.sgx.com/webcoranncatth.nsf/V...40016C7B6/$file/Portek-Masnet-FY1H2011.pdf?openelement
Portek had only 147.889m issued shares outstanding, and 7.463m employee stock options - giving a potential max. total of 155.352m issued shares.

At $1.20/s share, ICTSI's GO values Portek at $186.422m.

In H1-FY11, Portek recorded a NP of $7.257m, and produced an aftertax FCF (before capex, and accounting for changes in working capital items, and translational forex losses) of $13.22m. Using the above as a basis, ICTSI's GO values Portek at approx. 12.8x of current-year's NP, or approx. 7.0x of current-year's FCF. In all fairness, ICTSI's GO is not very rich based on normal valuation yardsticks.

So it appears there is some room for manoeuvre left for a potential white knight or 2nd trade bidder. A related relevant question: Is Portek such a rare and potentially very valuable business asset that is worth fighting for in the eyes of ICTSI and a potential white knight or 2nd trade bidder?