Aztech shares up after founder makes cash offer

Aztech Group shares jumped 27.7 per cent yesterday after founder and chief executive Michael Mun launched a cash offer to take the electronics, materials supply and marine group private.

Mr Mun's offer price of 42 cents a share would give investors a 29.2 per cent premium over the last traded price of 32.5 cents before the offer was made. The offer values Aztech Group at $20.4 million.

The shares closed nine cents higher at 41.5 cents, with 386.9 million units changing hands.

Mr Mun is making the offer through AVS Investments, and together with parties acting in concert with him, controls 25.6 per cent of the issued shares. These parties are his brother and three sons, as well as a company, AVS Technologies.

Aztech was founded in 1986 to make multimedia products for PC vendors. It listed on the mainboard of the Singapore Exchange in 1994.

Mr Mun joins a growing number of local founders who are seeking delistings amid a lacklustre market.

Lifestyle products seller Osim International and restaurant chain Select Group have made successful exits from the local bourse, while an attempt to take traditional Chinese medicine specialist Eu Yan Sang International private is ongoing.

Founders often go for delistings when they feel that their firms are being undervalued by the market. But Mr Mun said his main reasons for launching the offer are thin trading liquidity and the struggle for management flexibility.

He told The Straits Times yesterday: "I have tried transforming the company through diversification but diversification comes with a set of challenges, and unfortunately the investing community in Singapore is not warming up to the idea (and) the shares of Aztech are not attracting interest."

Over the years, Aztech has branched into various new businesses - from LED lighting to marine logistics and even food trading. In 2014 ,the firm turned heads when it acquired the recipe and premises of Kay Lee Roast Meat Joint for $4 million.

The transformation of Aztech is "still a work in progress", Mr Mun said, and he expects that many hard decisions as well as restructuring can be carried out more efficiently if the company is private.

Mr Mun added that his takeover offer gives shareholders the chance to offload their stock.

He said: "Market conditions are not getting any easier moving forward and after a great deal of thought I decided that the only way forward is to provide an option for shareholders to exit.

"I have devoted my entire life to building up Aztech (and) many shareholders have supported me through these 30 years. Where I could, I rewarded the shareholders with dividends."

Employees should not expect any changes to arise from the delisting, he added.

A letter detailing the offer will be sent to shareholders, and an independent financial adviser appointed to advise the independent directors on the exit offer.

AVS said it does not intend to revise the exit offer price.

This article was first published on September 21, 2016.
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