Sime Darby's E&O bid poses policy dilemma

Hantu Laut Sime Darby is short of 3% triggering the takeover threshold.A general offer would cost Sime additional funds of over MR2.0 billion assuming full acceptance by all shareholders. Can the minority shareholders push for a general offer? As it is Sime do not have to make the general offer.The Malaysian Takeover Code is available here. The ball is now at the feet of the SC Chairman. The Securities Commission is now under the watchful eyes of many vested interests. Look like Sime has not learned from past mistakes. Written by M.A. Wind

Friday, 09 September 2011

The plot tickens and all the attention is on the SC. With the Chairman of the SC being married to the Chairman of E&O, who bought shares of E&O just before the takeover by Sime Darby, making things even more intriguing. It is time for SC's next move, and everybody is watching. From The Straits Times, by Leslie Lopez, September 9, 2011: Sime Darby, Malaysia’s financially bruised plantation-based conglomerate is presenting the country’s securities watchdog agency with an awkward policy dilemma with its acquisition of a 30 per cent interest in public listed property concern Eastern & Oriental (E&O) for RM 766 million. Central to the widening public debate is whether the state-controlled group should be compelled to make a mandatory general offer for the remainder of E&O shares, a deal which could cost an additional RM 2.6 billion. E&O is a property concern with lucrative rights to carry out large reclamation works in the northern island of Penang. Critics of the deal argue that Sime Darby’s purchase of the block from three groups, including Singapore’s GK Goh Holdings, was structured in a way to circumvent the country’s takeover code. But proponents of the transaction insist that Sime Darby was merely opting for a more cautious approach to its investment in E&O, and that a general offer could being the offing in the coming months. In any case, the deal is presenting the Securities Commission Malaysia (SC) with a prickly regulatory problem over whether it should force Sime4 Darby to make an immediate general offer in the interest of protecting the rights of minority shareholders.Read more.

Is Sime Scrapping Bottom Of The Barrel?

Hantu Laut

I am not sure whether we should laud the action taken by Sime Darby against its executives and some of its former executives for its unprecedented whopping losses incurred the last year.

Is Sime looking for scapegoats? If it is than it may have looked in the wrong place.

What is the likelihood of recovering the money as the claim put forth is a pittance compared to the total loss and absurdly on the basis of accusation of mismanagement and incompetence and not misappropriation or corruption.

There is a clear distinction between the two.Mismanagement and incompetence are not criminal acts, misappropriation and corruption are.Sure, you can sue them for negligence which will be so tedious to prove.Was this action taken due to political pressure to appease the opposition?

The company also alleged that the five accused acted as a "decision-making unit" in the energy and utilities division and were responsible for the division's actions and omissions.

The question is what happened to Sime's Board of Directors, had they become redundant so much so that huge investments of capital nature are made by its executives and who select and approve the appointment of this bunch of incompetents?

Have the board not been negligent of its fiduciary duties to the shareholders. They are the trustees and the link between the shareholders and the executives.A company failure should be attributed more to the CEO and members of the board rather than its employees, putting asides wrongdoings of which the board should also take full responsibility.

A responsible board would have regular meetings to keep checks and balances.If such meetings are conducted regularly and board members are alert and responsible most problems could have been detected much earlier before they get out of hand.Obviously, the board is very much asleep leaving everything to the executives.

Why is it that every time a case like this came up the plaintiff or in the case of big corruption case the prosecutor always walk on weak ground?

Sime sued the five for breach of duties and asked for restitution of MR177 million.Why, only that amount when the total loss was MR2.1 million?Who is responsible for the bigger balance of losses?

The question again do the five have that kind of money considering how much Sime pay them every year?

Are there more cases in the pipeline or this will suffice to appease the public that the government is taking action.

We all know most GLCs are run by incompetents and they survived only when they have monopoly of the business, the moment the monopoly is removed and they have to compete on level playing field.....you know what follows.

Read the full story here.

Sime Darby:Raiders At The Gate ?

Hantu Laut

I am in complete agreement with our former Prime Minister Mahathir Mohammad here.Why repair something if it ain't broken.

There is nothing wrong with the IJN. Probably, the only government agency doing an excellent job and is the pride of the nation.It has saved many lives of those who can't afford the high costs of treatment.It's the government's social obligations to the people.

Is the government running out of ideas or running desperately out of funds that it has completely lost touch with reality or is there something more sinister than what the eyes can see?

As former Prime Minister Mahathir Mohammad has said one has to be discernible with what can be privatised and what not.

How would it make sense that Sime Darby a profit-oriented corporation is interested in an organisation that have to fulfill the government's social obligation and responsibility towards the people or are they only interested in making life easy for themselves by collecting the subsidised portion from the government, everything on the platter, a ready-made IJN and constant flow of revenue from the government.

You don't need smart people to make this type of decision.

Government should only privatise those agencies not doing well due to bad management by idiotic and bureaucratic civil servants.Why sell something if there is nothing wrong with it, unless there is gleam and greed in some one's eyes.

The pumping of IJN into Sime may lead to other things, A takeover of Sime by interested party later is not an impossibility.I don't know how much is the government's stake in Sime Darby.If the government owned less than 50% than Sime can be subjected to takeover bid, hostile or otherwise, by any party that already have significant equity in the company or by outside entity that have access to huge financial resources and allowed a takeover with the blessing of the government.

In December 2007 Sime Darby became the biggest corporation on the KLSE with market capitalisation of RM66 billion after a re-listing exercise, surpassing Malayan Bank and IOI.Upon re-listing the share price debuted at RM11.20 and peaked in January 08 at RM13.40.Yesterday its share price closed at RM5.45.

With the bleak economic outlook and a saturated palm oil market the share price is expected to decline further.This golden goose is ripe for takeover bid and don't be surprised if there are already discreet plan to make hay while the sun shines.It would be a steal to takeover Sime at current market price.

The government has already dug about three feet deep of its grave and continuing with its arrogance and ignoring the people wishes would complete the six-foot depth required to bury them by the time the next general election comes around.

The unsolicited proposal should be thrown out of the window.