An independent director of elevator manufacturer Yungtay Engineering Co (永大電機) yesterday raised concerns about the terms of a buyout deal launched by Hitachi Ltd, a major shareholder of the company.
Yungtay’s board of directors might be harming shareholders’ interests by turning down better deals offered by other suitors such as Otis Elevator Co and Schindler Group, independent director Chen Shih-yang (陳世洋) was quoted as saying.
Other prospective foreign buyers had offered higher prices than the NT$60 per share public tender offer announced by Hitachi in October last year, Chen said.
Chen made the comments following an extraordinary board meeting yesterday, which gave approval for three independent directors to form a committee to review the buyout and report their opinions in 15 days.
The valuation reports from the buyout deal did not fully reflect Yungtay’s assets in China, which comprise 70 percent of the company’s total revenue, Chen added.
In addition, Hitachi, which holds a 11.7 percent stake in Yungtay, had lowered the scale of its tender offer from betwwen 38.32 and 88.32 percent to wholly take over the company to between 21.66 and 88.32 percent, Chen said.
Changing the public tender offer could breach securities laws, Chen said.
He also suspected that the change was made to alleviate difficulties in acquiring shares from the open market and said that Hitachi’s planned purchase includes stakes held by Yungtay’s labor pension fund, employees’ trust funds and holdings at investment companies controlled by Hsu Chou-li (許作立), one of the company’s founders.
The valuation reports did not include Yungtay’s considerable real-estate assets, including production plants and land in Shanghai, Chengdu and Tianjin, as well as office buildings, he added.
Although Hitachi did not begin making tangible progress toward gaining regulatory approval after announcing its buyout price, Yungtay’s stock price has already begun rallying, drawing concern about market manipulation, a lawyer, who spoke on the condition of anonymity, was quoted as saying.
Yungtay said that the offer would be reviewed by the committee of independent directors.
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