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Broker's take: Offer for ECS is fair, says OCBC Investment Research


VST Holdings cash offer of S$0.68 a share for all the remaining shares in ECS it does not own is fair, OCBC Investment Research said on Monday.

The research house has recommended that ECS shareholders accept the offer by VST, which already owns 89.5 per cent of ECS.

VST has also proposed to pay holders of outstanding options a cash amount by which the offer price is in excess over the exercise price of the options, provided the option holders do not exercise their options by the close of the unconditional cash offer. It intends to delist and make ECS its wholly-owned subsidiary.

OCBC Investment has reinstated its fair value estimate of S$0.68 a share for ECS. It noted that the cash offer of S$0.68 a share represents a premium of 11.48 per cent over the last traded price on Sept 22 prior to a suspension in the trading of ECS shares.

It said the offer by VST presents a good opportunity for investors to exit the illiquid market for ECS shares. The average daily trading volume for ECS during the six-month period up to Sept 22 was only about 102,297 shares, representing less than 0.04 per cent of the total number of issued ordinary shares. It also noted that VST does not intend to take any steps to restore public float to lift the suspension of trading.

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"Hence, with the offer price of S$0.68/share meeting our FV (fair value) estimate, we think the offer is fair and recommend shareholders to accept the offer,'' OCBC Investment said.

Trading in ECS shares remained suspended.

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