Why has Sime Darby changed tack on E&O investment?

WHEN Malaysian conglomerate giant Sime Darby Bhd picked up a 30 per cent stake in niche builder Eastern & Oriental Bhd (E&O) five years ago at an eye-popping premium and dodged a general offer (GO), the world's largest oil palm planter unwittingly set off a chain of events unheard of at the time in corporate Malaysia.

Minority shareholders were incensed that they were not entitled to the sweet RM2.30-a-share exit option - a 60 per cent premium over E&O's price level then - that state-controlled Sime Darby paid to acquire the block. The buyer paid a total of RM776 million (S$259 million) to three parties, including Singapore's GK Goh Holdings and E&O managing director Terry Tham.

In a rare display of protest against a regulator there, a minority shareholder of E&O took Malaysia's Securities Commission to court for granting Sime Darby a GO waiver. The spotlight was also turned on the watchdog's chief then whose husband was chair of E&O's board.