Summit's share price doubles on takeover bid

A SURPRISE takeover bid for SM Summit Holdings almost doubled the stock's share price yesterday.

Investors snapped up shares of the CD maker in anticipation of a possible reverse takeover.

The counter closed at 28.5 cents, 13.5 cents higher than the previous close of 15 cents last Thursday.

A total of 43.5 million shares - 100 times the stock's average daily trading volume - was traded.

The share price spike followed a lunch time announcement that an investment company, Thinkpac, is offering 15 cents for every Summit share.

That figure is way below yesterday's closing price. What appears to have caught the eyes of investors is the prospect of a revitalisation of Summit via a reverse takeover, foreshadowed in the announcement.

The offerer, an investment vehicle of stockbrokers David Loh and Han Seng Juan, proposes a deal to inject electronic waste management firm TES-Envirocorp into Summit.

Both Mr Loh and Mr Han are directors of UOB Kay Hian's stockbroking arm and have been involved with the recent initial public offerings of Pine Agritech and Synear Food Holdings.

Together, they own an 18 per cent interest in TES.

The offer was prompted by the sale of 90 million shares by Summit's founding chairman and managing director Lee Kerk Chong to Thinkpac for $13.5 million - 15 cents apiece.

The deal raised Thinkpac's stake in Summit to 32.1 per cent, requiring it to make a general takeover offer under Singapore Exchange rules.

The offer is conditional on Thinkpac attaining at least 50 per cent of Summit.

Mr Lee has committed to holding on to a 15 per cent stake, which he will not sell under the current offer.

Market watchers said investors are training their sights on Summit's possible reverse takeover of TES.

The proposed deal would see Summit issue new shares at 15 cents apiece to buy TES' assets. But no valuations of TES were given.

'While figures for the reverse takeover have been disclosed, investors are obviously optimistic about the acquisition,' said CIMB-GK corporate finance senior vice-president Mah Kah Loon.