Can “Money Game” be Expected to Increase Share Price of MK over “Hostile Takeover”?

This is getting more and more interesting over the case of Mr. Prateep Tangmatitham, Supalai Public Co., Ltd. or SPALI Chairman of the Board and Chief Executive Officer, using the company’s subsidiary to make a tender offer on M.K. Real Estate Development PLC. or MK, which originally belongs to Mr. Prateep’s elder brother, Mr. Chuan Tangmatitham.

No doubt that this tender offer sends a clear signal of holding company’s property in taking over the business. The question is why SPALI or, to be frank, Mr. Prateep, would want to regain the business of his brother that has been sold to an outsider, and return it to Tangmatitham’s asset again?

Take a look back on June 2015, which was not only a breaking news in the real estate business, but also received a lot of attention from the capital market, when a veteran real estate investor, Mr. Chuan, made an announcement of trading MK share that he and his family held a total of 21% share to a once called financial wizard, Mr. Suthep Wongvorazathe.

A large number of questions were raised after that, but they all seemed to slowly disappear because of the classic reply “Mr. Chuan comes to an old age and has been in real estate more than half of his life. He would want to retire.” Given this reason, all the buzz was gone…..until!!…..!!

His younger brother, Mr. Prateep, made his move by purchasing MK share since 2017 in succession. His share grew from 5% to 10% in the beginning of 2018 and is currently holding more than 11%.

The latest activity on this matter was on July 11 that Supalai Property Management Co., Ltd. or SPM, a subsidiary of Supalai, out of nowhere, announced a tender offer for MK share. If we shallowly look at the situation, the reason is clear in itself.

However, there had been a movement from other major shareholders, which is Finansa group. It is interesting to see if this group is joining forces with Mr. Suthep or not. These shareholders are Finansa Public Co., Ltd., C.P.D. Holding Limited and Mr. Philip Vera Bunnag.

Two of these three major shareholders, which are Finansa and Mr. Philip, had made more purchase on the share for 0.32% and 2.45% respectively, increasing their shares to 10.10% and 6.23%. More importantly, the purchases were made on the same day that SPM declared  its intention to takeover the business.

As of now, it is to be inspected that Supalai group and Finansa group are now allies or hostile co-shareholders of MK under the fact that Mr. Chuan once sold his entire share to a non-relative, and now his younger brother is tirelessly taking it back by both in his own name and a company tender offer.

This case is very intriguing and similar to the case in 2013 that a renowned real estate company once had. At the time, there were two group of major shareholders frantically trying to occupy company’s shares in order to get  absolute power in the company.

The consequence of the case was constantly rising share prices. It can be said that whoever held that share at the moment had hit a big jackpot. Besides easy profit, they can put the case aside of whether which of these two groups will takeover in the end. What most important to traders was who were the best in bluffing and came out at top.

In this current case, MK shares rose to match the tender offer at ฿4.10/share since the day of declaration in “taking over”. After a steady price for almost a week, another wave of trade offer was made, which hiked the price to ฿4.60-4.70/share.

Therefore, an interesting point of this incident is that some traders might have found an early signal of this hostile takeover of  the sophisticated real estate company.

Meanwhile, what to keep an eye on is that since Supalai has made it clear that they are fully-armed armies with plenty of supplies from capital increase through warrants and low interest rate loan. They are ready for a war with anyone and any time.

Fundamental factors of MK can be left for another day. The only thing to be concerned about right now is that if this “Hostile Takeover” theory is legit, a long long “money game” is to be expected.