Boustead Falls Most Since 1998 After Take-Private Offer Scrapped

Yantoultra Ngui and Elffie Chew
Updated

(Bloomberg) -- Boustead Holdings Bhd. plunged by the most in 23 years after its major shareholder abandoned an offer to take the Malaysian conglomerate private.

Lembaga Tabung Angkatan Tentera, the country’s armed forces pension fund that owns about 59.4% of Boustead, said Tuesday that it has decided not to proceed with the offer as the pandemic-triggered economic challenges and lockdowns added uncertainties. The cancellation also came as the country’s securities watchdog refused to further extend the deadline. The announcement confirmed an earlier Bloomberg News report.

Shares in Boustead resumed trading on Wednesday and dropped as much as 19.7%, their biggest intraday loss since March 1998. The stock was down 16.2% at 59.5 sen as of 9:41 a.m. in Kuala Lumpur. The Malaysian benchmark stock index rose 0.7%.

The military fund in May last year confirmed it was weighing options for Boustead after Bloomberg News first reported the take-private plans. After the offer was scrapped, LTAT said it will continue to support Boustead’s plan to pursue its turnaround plans, while the fund will keep reviewing its options to enhance the value of its portfolio.

LTAT was set up in 1972 to provide retirement and other benefits to members of Malaysia’s military. Under the superannuation plan, members are required to contribute 10% of their monthly salary while the government contributes 15%, according to its website. The fund has roughly 9.5 billion ringgit ($2.3 billion) in assets under management, according to a report by state news agency Bernama on its 2019 financial results.

Among the armed forces fund’s largest holdings are its stake in Boustead and a 35% stake in Affin Bank Bhd., according to data compiled by Bloomberg. The fund paid an annual dividend of only 2.5% in 2019, and 2.0% in 2018, its lowest levels compared with a minimum of 6% paid over the past four and a half decades. The fund hasn’t declared any dividend for 2020.

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