Creative Tech sale, new strategic direction, board refresh could be on the cards
ELECTRONICS company Creative Technology could see some change in direction – or at least a change in ownership – following the death of its founder and sole substantial shareholder Sim Wong Hoo, market watchers said.
TSMP Law Corporation joint managing partner Stefanie Yuen Thio noted speculation in the markets that there could be a sale of Sim’s stake in the business.
The company’s shares rose 25 per cent on Thursday (May 5) after Sim’s death was announced. Sim held 33.1 per cent of Creative, according to the latest annual report.
She added that three of the four remaining directors, who have served for more than nine years, may have to step down soon, as Singapore Exchange Regulation has proposed a hard cap on directorship terms.
Maybank analyst Jarick Seet said the eventual buyer of Sim’s stake would need to decide whether to take Creative private. The outcome could be a way out for shareholders who have been holding the stock for a long time.
Creative shares closed at S$1.79, up S$0.03 or 1.7 per cent. With a market capitalisation of S$126 million, it trades at 1.2 times book value.
Another option could be for Sim’s heirs to stay invested and promote or hire a C-suite team to turn the company around.
Seet said Creative’s financial performance has been “dismal” since it sued Apple in 2006 for patent infringement, and that investors may support a new direction for the company.
“All in all, it’s a breath of fresh air and potentially much better than what Creative has been delivering in the last few years,” he said.
Nevertheless, Yuen Thio noted challenges for any newcomer unfamiliar with the business.
“It will also take time, and the market may have a short attention span,” she said.
She noted that it is difficult to tell how hands-on the other senior executives of the group are, and how well the new team can fill Sim’s “admittedly big shoes”.
“Stepping in to run things if you’re not already involved in the business, with the whole market watching, may be difficult.
“On the other hand, you may not want to sell the group off because this is the legacy of Singapore’s first big technopreneur,” she said, adding that Sim’s heirs should act quickly, inform the market of their moves and show decisive leadership.
