Lian Beng’s lowball privatisation offer raises urgency of addressing low market valuations

THE controlling shareholders of Lian Beng Group unveiled plans this past week to take the construction and property development company private at less than half its book value – using a well-known loophole related to compulsory acquisitions that the government has already decided to plug.

The independent directors (IDs) of Lian Beng should ensure minority shareholders of the company are properly informed about the imminent changes in the law, of course.

Yet, unless the IDs can also promise that Lian Beng will pursue a credible programme to improve the long-term market value of its shares if the company remains listed, many minority investors may well decide to just accept the lowball offer and move on.