SINGAPORE - Japanese electronics retailer Nojima Corp is making a conditional cash offer for Courts Asia at $0.205 per share as it seeks to gain a strong foothold in South-east Asia.
The offer price represents a premium of about 35 per cent above Courts' closing price on Wednesday (Jan 16), and a premium of about 36.1 per cent, 34.3 per cent and 23.3 per cent above the volume-weighted average price (VWAP) per share for the one-month, three-month and six-month period respectively. Courts shares closed at 15.2 cents on Thursday.
Trading in Courts shares were halted before the market opened on Friday, but its stock price has been on a tear since the trading halt lifted just after the midday market break. As at 2.36pm, its shares were trading 4.8 cents or 31.6 per cent higher at 20 cents, 2.5 per cent under Nojima's offer price per share.
The counter, which averaged a turnover of 255,000 shares over the last 15 trading days, was also seeing comparatively heavy trading, with 1.59 million shares changing hands.
The offer is conditional upon unit Nojima Asia Pacific having received by the close of the offer sufficient valid acceptances that together with the shares owned by Nojima, and any parties acting in concert with it, results in more than 50 per cent of the shares in issue and outstanding. Nojima has received an undertaking from Singapore Retail Group (SRG), under which SRG has agreed to irrevocably tender all its 382 million shares translating to a 73.8 per cent stake in the company. Once SRG accepts, the offer will turn unconditional.
Tokyo-listed Nojima is an electrical appliance retail chain mainly dealing with the sale of consumer digital appliances, and has a headcount of over 8,000 employees worldwide. It has a market capitalisation of $1.4 billion and earned revenues of $6.1 billion for the financial year ended March 2018.
After the offer is completed, Nojima may undertake a "strategic and operational review of Courts, with a view to realising synergies, economies of scale, cost efficiencies and growth potential."
It will also consider delisting Courts from the Singapore Exchange if it gets enough acceptances to do so.
Explaining the rationale behind the acquisition, Nojima said it has been mulling over entering the consumer appliance retail market in South-east Asia, and that synergies can be created between the two retail groups, including cross-selling to an enlarged customer base, economies of scale, improvement of productivity and cost efficiencies, as well as knowledge sharing.
It also highlighted that shareholders can use the offer as an exit opportunity given Courts' low trading liquidity. "The closing price of the shares have not been at or above the offer price since 27 July 2018," it added.
The offer document will be dispatched to shareholders in 14-21 days from the date of the offer announcement.
The board said on Friday it appoint an independent financial adviser (IFA). The advice of the IFA and the recommendation of the company's independent directors will be issued to shareholders via a circular within two weeks from the offer document.
Courts posted a net loss of $3.1 million for its fiscal second quarter, sinking into the red from a net profit of $1.5 million for the same period a year earlier, weighed down by lower gross profit margins and revenue. Revenue for the three months ended Sept 30, 2018, fell 6.4 per cent to $165.1 million as its Singapore operations reported lower revenue owing to lower earned service charge income and corporate sales.
Courts announced on Tuesday it will close one of its Indonesian megastores in Tangerang as it was historically not profitable and to avoid high rental costs over the remaining lease term. It also bought a property in Jakarta for $9.36 million and said it will restructure its megastore there.