Is Tat Hong courting another takeover offer?

Acquirers may need to take on its debt obligations.

Another potential takeover offer may be on the horizon for Tat Hong, according to a report by OCBC.

Tat Hong announced on 15 March that they were approached with regards to a potential transaction “which may or may not lead to an acquisition of the issued share capital of the Company.”

Citing Bloomberg, OCBC notes that the Ng family holds a combined stake of about 56%.

Moreover, following a general drop in share price, Tat Hong has since gained 14.5 cents yesterday on markedly higher volume, effectively incorporating a takeover premium.

OCBC also notes that the group has been in process of spinning off its tower crane rental business, which operates in China, on the Taiwan Stock Exchange.

As of 31 December 2015, Tat Hong had a net debt to equity position of about 0.72x, which could be a concern for acquirers whom would likely need to take on its debt obligations.

Nonetheless, discussions are preliminary and there is no certainty that the discussions would result in a transaction.

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