Why Viz Branz shareholders should embrace CBB's takeover

Resisting might well be futile.

According to OCBC, Viz Branz minority shareholders hold a "limited upside and recourse going forward" in the face of a takeover bid from Cheng Beng Beng. This is especially since Lam Soon, which holds a 20.1% stake in Viz Branz, is widely seen to accept the offer and yield to the takeover.

Here's more from OCBC:

CEO launches takeover bid. Viz Branz announced Friday that its current CEO, Chng Beng Beng (CBB), has launched a general offer for the company. The offer is valued at S$0.78/share, representing a premium of 15.5% over the one-month weighted average trading price of S$0.675. Mr. Chng currently has a majority stake of 58.1% after acquiring the 38.3% from his father (ex-CEO). Shareholders should start to receive the offer document issued by Credit Suisse from 19 Jul 2013. 

Lam Soon expected to yield. In our view, Lam Soon (who has a 20.1% stake) is expected to accept the offer and not launch a separate counter-offer – despite only buying into the company less than a year ago – as the offer price represents an exit opportunity with a reasonable 6% gain. 

Conclusion to a long-drawn event. Speculation over a GO was triggered by the Lam Soon acquisition, and we have called for the possibility of a GO for slightly under a year. Nonetheless, we are finally vindicated by this favourable outcome. While our longstated target price of S$0.74 falls slightly under the offer price of S$0.78, the expectation for a less aggressive acquisition price was still satisfied.

Accept offer. CBB intends to take the company private and delist from SGX. Therefore, with an offer price that we deem fairly values the company, and limited upside and recourse for minority shareholders going forward, we urge shareholders to ACCEPT THE OFFER.