Reviewing the massive drop, i asked myself, what triggers it ?. After all, there wasn't any bad news or detrimental announcements that warrants the collapse. Or maybe, did i missed out something ?
Below is an extraction of the announcement made recently by ISB on the offer received from Ninetology.
"On 29th August 2012, ISB received a restrictive offer from Ninetology, to purchase all and not partial of the shares held by following at an offer price of RM0.55 per share.
Chin Boon Long - 65,800,732 shares
Firstwide Success Sdn. Bhd. - 98,496,924 shares
Landasan Simfoni Sdn. Bhd. - 25,500,000 shares
Titanium Hallmark Sdn. Bhd. - 24,500,000 shares
This offer will automatically expired on the 11th September 2012 (14 days from the date of letter) . The offer will only be executed on the premise that all and not one or some of the abovenamed persons accepts the offer unconditionally."
With an offer of RM0.55 per share, it will be silly for ISB shareholders to short sell themselves at the current price level. Anyone who purchase at the current price will expect to profit more than 100% should the deal goes through. The question is, do you think the 4 shareholders will accept the lucrative offer ?.
The last sentence of the offer letter is of utmost importance. It states that "in order for the offer to go through, ALL and NOT ONE or SOME of the 4 shareholders above must accept the offer UNCONDITIONALLY".
There are 2 major factors to addressed for the deal to go through. Firstly, ALL the 4 shareholders must accept the offer of RM0.55 per share, which i don't see why they won't accept such an attractive valuation. Secondly, (this is more critical) they must accept the offer UNCONDITIONALLY. This is a very generic, open and unclear statement. There's no explainations on any sort of conditions. As minority shareholders, we expect to have a clearer picture of the deal which will allow us to make a more judgmental decision. Saying so, we won't have to wait too long for the decision as September 11 (does the date sounds familiar 911) is just around the corner. Two things will most likely happen. The price will shoot up to 50c if the deal is ON or the price will collapse further (possible below 13c) if the deal is OFF.
The upcoming AGM (Annual General Meeting) on 20th September could be a good platform for shareholders to better understand the company, to mingle around with the Directors or to seek clarification on any matters. For those who wish to attend, the venue is at Tioman Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur.