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BRC Asia makes offer for Lee Metal Group

STEEL prefabrication firm BRC Asia is offering to buy fellow steel player Lee Metal Group at an offer price of 42 Singapore cents for each share, with the aim of delisting the company if it achieves the requisite acceptances.

The offer price represents a premium of 9.1 per cent to Lee Metal's last traded price of 38.5 Singapore cents on Nov 10, 2017 - being the last full trading day prior to the announcement by the company on notification by certain shareholders of an unsolicited approach to acquire their shares.

The offer is 21.4 per cent higher than the volume-weighted average price for the three-month period up to the last trading day. (see amendment note)

BRC Asia said that the two businesses are complementary and sees potential synergies from the acquisition. These include cross-selling an enlarged customer base, economies of scale, improvement in productivity and cost efficiency, as well as sharing of best practices.

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Furthermore, the offer will allow minority investors in Lee Metal to realise their investment, it added, noting that trading liquidity in the shares has been low.

BRC Asia has received irrevocable undertakings from shareholders representing 48.06 per cent of Lee Metal's shares to accept the offer.

The firm aims to eventually delist Lee Metal as this will facilitate management and operational control over the company and its subsequent developments.

The offer, however, is conditional on approval by the Competition Commission of Singapore, among others.

BRC Asia provides just-in-time reinforcing steel solutions to the construction sector in Singapore. Lee Metal also fabricates reinforcement steel products for the construction sector, including HDB and SMRT projects, and has a presence in Malaysia and Hong Kong too.

Amendment note: The story has been revised to clarify that the offer price's premium of 9.1 per cent is over the last traded price on Nov 10 last year, which is the last full trading day prior to the firm's announcement of an unsolicited approach connected to an offer.