SINGAPORE - Steel distributor HG Metal Manufacturing is selling its 23 per cent stake in mainboard-listed steel mesh maker BRC Asia to Esteel Enterprise for S$39 million.
Esteel Enterprise made a mandatory conditional cash offer for BRC Asia shares on Sept 8.
In deciding to sell its stake, HG Metal Manufacturing said it took into account the financial performance of BRC Asia, its challenging business prospects going forward with the construction industry experiencing difficult and tough market conditions, as well as the substantial increase in the price of BRC Asia shares since May 31.
"The company has reviewed its investment strategy in BRC Asia and considers it an opportune time to realise its investment in BRC Asia and apply the proceeds to other business and investment opportunities which are more likely to enhance shareholder value," it said in its exchange filing on Saturday (Sept 9).
The move comes after activist fund Quarz Capital Management - a minority shareholder of HG Metal - earlier urged the firm to consider selling its stake in BRC Asia.
Although HG Metal is BRC Asia's second-largest shareholder, its stake "currently provides no tangible value and/or contribution to HG's operations", Quarz wrote in an open letter to the HG Metal board in May.
It suggested that part of the sale proceeds could be returned to shareholders.