Dyna-Mac rejects Hanwha’s takeover offer

10 Oct 2024

Ven Sreenivasan
Senior Columnist

Thu, Oct 10, 2024, 06:44 PM

Source: The Straits Times

Dyna-Mac rejects Hanwha’s takeover offer

SINGAPORE - The controlling estate of listed offshore and marine player Dyna-Mac has rejected the voluntary conditional offer by South Korean-controlled Hanwha Ocean, saying the 60 cents offer was a lowball price.

“Offer price of 60 cents per share was made when Dyna-Mac’s share price was at its lowest point over the previous 35 trading days,” stated a statement from the estate of Mr Lim Tze Jong, the late founder of the company.

“Dyna-Mac’s share price has consistently traded above the offer price since Hanwha’s announcement.”

The offer from Hanwha Ocean SG – a special-purpose vehicle controlled by Hanwha Ocean and Hanwha Aerospace – is conditional upon it ending up with more than 50 per cent of Dyna-Mac’s shares.

The South Korean entity owns nearly 282.9 million Dyna-Mac shares, representing 24 per cent of Dyna-Mac’s total number of shares, mostly purchased at around 40 cents in May from Keppel.

For its part, Dyna-Mac said the offer price needs to factor in the company’s strong financial performance and its current management team’s strategies for further growth.

In a statement, the company’s owners said the offer lacked an attractive control premium and is below analysts’ 12-month target price range of 64 to 71.5 cents. The stock closed at 63 cents on Oct 10.

The statement also noted that Hanwha’s expansion to offshore construction heightens Dyna-Mac’s synergistic value to Hanwha, given Dyna-Mac’s expertise in topside modules, and added that the offer price “needs to reflect value Dyna-Mac will bring to Hanwha’s global operations”.

It added: “At the current offer price for a Singapore gem, the estate does not find the offer by Hanwha compelling.”

A sharp uptick in offshore energy exploration projects has buoyed Dyna-Mac’s fortune of late, as it has the fortunes of other offshore and marine support and engineering players as well.

Dyna-Mac saw its net profit for the six months to June 30 surge 283.9 per cent to $38.8 million, on the back of a 42.5 per cent increase in revenue to $259.7 million following completions of major projects, improved productivity and a higher volume of projects undertaken. The company also had a net cash position of $307.7 million (including its holdings of Singapore Treasury Bills) as at June 30.

It remains to be seen if Hanwha will raise its offer price. The offer is conditional on the Competition and Consumer Commission of Singapore’s approval.