THE voluntary unconditional cash offer for consumer electronics retailer Challenger Technologies : 573 0% closed on Tuesday (Jul 25), with the offeror DigiTech Holding receiving valid acceptances representing about 97.8 per cent of the total number of shares in the company. 

As at 5.30 pm, the total number of shares owned, controlled or agreed to be acquired by DigiTech, as well as valid acceptances of the offer, stood at 394.3 million shares, or 98.2 per cent of the total number of shares.

DigiTech is the bid vehicle of a consortium formed by Challenger’s majority shareholders including Asia Consumer Electronics – a special-purpose vehicle (SPV) linked to Dymon Asia Private Equity – and Fortuna Capital, an SPV wholly owned by Challenger chief executive Loo Leong Thye.

The offer was made with a view to delist Challenger from the Singapore Exchange (SGX), following low trading volume and a desire for more flexibility in managing the business. 

As more than 90 per cent of its shares have been or will be acquired, Challenger no longer meets SGX’s free-float requirement, under which an issuer must ensure at least 10 per cent of its total number of issued shares are held by the public. This means SGX can suspend trading of Challenger’s shares after the offer has closed.

When the offer was first announced in May, DigiTech said the privatisation offer would provide shareholders with a “clean cash exit opportunity” to realise their investment at a premium – something that might otherwise “not be available, given the low trading liquidity of the shares”.

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It added that the move will give the company more flexibility in managing its business, as well as optimise the use of its management and capital resources to implement operational changes. 

This is especially crucial in the near- to mid-term, as operational costs increase, it said. “Coupled with weak retail sentiment and industry disruption resulting from the rise of e-commerce, the company has experienced a decline in revenue over the last five years.”

In June, the cash offer was raised to S$0.60 per share, up from the original offer price of S$0.56 that DigiTech had proposed on May 30.

The offer price represented a 10.5 per cent premium over the volume-weighted average price of S$0.543 per share for the company’s shares in the one-month period before the cash offer was made.

Shares of Challenger last closed at S$0.595 on Monday. Its board of directors has requested for SGX to suspend trading of its shares from Wednesday.