Singapore’s largest F&B catering group Neo Group announced that it will be privatising. The group’s founder, CEO and chairman Neo Kah Kiat and his wife Liew Oi Peng will be buying the remaining shares in Neo Group at 60 cents per share.
This is no surprise as Neo has been frequently buying back shares in his company since the second half of 2020. In a previous interview with The Edge Singapore, Neo said that the reason for the buybacks at that time was because he found that the shares were trading at a PE ratio that was too low.
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During the interview back in Aug 21, 2020, Neo said that he had no plans to delist despite holding such a high amount of stake – 76.9% - in the company. “I still enjoy this platform and I have bigger and more plans for the company,” he said.
See: Neo Group to develop multiple income streams; expand along whole supply chain
However, Neo has since changed his mind and will be taking the company private. Following the privatisation, Neo’s shareholding in the company will increase from 76.69% to 90%, while Liew’s stake will increase from 5.47% to 10%.
The offer of 60 cents per share represents a premium of about 20% over the last traded price of 50 cents on Mar 29, before the stock issued a trading halt. In its announcement, Neo Group says that it is in the view that the offer represents an opportunity for Shareholders to realise their investment in the Shares at a premium to historical prices without incurring brokerage and trading costs in an uncertain economic environment.
To recap, Neo Group’s latest 1HFY2021 earnings ended Sept 30, 2020, saw earnings surge 486.5% y-o-y to $13.6 million, mainly due to higher financial grants from the government and cost cutting measures.
See: Neo Group reports 486.5% surge in 1H earnings to $13.6 mil on higher other income and reduction in operating expenses
