SIME DARBY - E&O

Sime Darby in the limelight for the wrong reason? More upside for E&O shares?

According to The Malaysian Insider, a minority shareholder of E&O Bhd is suing the Securities Commission (SC) for failing to compel Sime Darby Bhd to make a general offer for all the shares in the property developer after the conglomerate acquired a 30 per cent stake in August for RM776 million.

Singapore’s The Straits Times reported today that Michael Chow Keat Thye, a minority shareholder of E&O, is seeking to overturn the waiver granted to Sime Darby by the industry regulator, which he maintains was “irrational and one which no reasonable body would have reached”.

The newspaper described the legal challenge as a rare display of minority shareholder activism in corporate Malaysia with far-reaching implications.

“Should Mr Chow succeed in his suit, Sime Darby would be compelled to make a general offer for the E&O shares it does not already own, an exercise that would cost the plantation-based conglomerate an additional RM2.6 billion and put a major strain on its internal financial position,” the newspaper said.

Chow’s lawyer, Datuk Shafee Abdullah, told The Straits Times that the High Court has decided there are legal grounds to review the SC’s decision on the E&O deal.

To recap, Sime Darby acquired 30% stake of E&O shares at RM2.30.