Broadway Industrial Group receives a privatization offer with a cash option of S$0.197 per share

ENGINEERING solutions provider Patec Group has made a mandatory conditional cash offer to take Broadway Industrial Group private for S$0.197 in cash per share, it was announced on Monday (Oct 28).

The offer comes after Patec acquired about 197 million Broadway shares from the company’s non-executive directors Lew Syn Pau and Lau Leok Yee. These shares represented approximately 43.3 percent of the company’s share capital, excluding treasury shares.

Before the acquisition, Patec did not own or control any shares. This recent purchase thus triggered the mandatory conditional cash offer for all shares of Broadway, excluding treasury shares and those already owned, controlled and agreed to be acquired by Patec.

An announcement from UOB, Patec’s financial advisor, states that if distributions are made after the date of the announcement, Patec may reduce the offer price by the amount of the distribution.

The offer price of S$0.197 per share represents a 7.5 per cent discount to Broadway’s net asset value of S$0.213 as of June 30, according to the company’s latest published financial statements.

It is 7.1 percent higher than the last traded price of S$0.184 on October 25, the last full trading day before the offer announcement.

The offer price also represents a premium of approximately 27.1 percent, 7.1 percent, 3.1 percent and 3.7 percent over the twelve-month, six-month, three-month and one-month volume-weighted average prices, respectively, to the last trading day.

The offer is subject to the receipt of valid acceptances by Patec, which will result in the offeror and the concert parties owning more than 50 percent of Broadway at the end of the offer.

UOB noted that the offer offers shareholders the opportunity to “realize their investment in the shares at a premium to historical trading prices,” without brokerage fees and other trading costs.

The offer allows Patec to expand its product and service offering in the region, the financial advisor said. This is because Broadway produces precision machined components and has operations in Thailand, China and Vietnam. It also operates in South Korea and is headquartered in Singapore.

Broadway, which was listed on the main board of the Singapore Exchange in 1994, sells and distributes precision components and parts and provides after-sales services, among other products.

UOB also said Patec plans to make Broadway a wholly owned subsidiary and “does not intend to maintain its listing status.”

Patec currently plans to ensure that Broadway’s operations continue after the deal. It also wants to conduct a review of Broadway’s operations, management and financial position.

The bidder will also restructure and optimize Broadway’s business operations to integrate them with those of the Patec group following the bid, UOB said, which also warned that such initiatives could entail “significant capital expenditure.”

Shares of Broadway Industrial Group ended flat at S$0.184 on Friday before prompting a trading halt on Monday morning.