Take-overs and mergers in Malaysia: some implications on industrial structure and distribution

Abstract

On July 11, 1975 the Finance Minister of Singapore, Hon Sui Sen appointed two solicitors to investigate into the affairs of Haw Par Brothers International Ltd. The company was a Singapore - registered British managed and controlled multinational with substantial interests in Malaysia and Hong Kong. The move by the Singapore authorities arrived in the wake of a take-over tangle involving Malaysian interests. Haw par had announced that agreement had been reached with Pernas Securities Sdn. Bhd., a wholly-owned subsidiary of Pernas, the Malaysian National Corporation, for Hav Par to purchase from Pernas Securities its subsidiary, Tradewinds. The acquisition would give Haw Par control of London Tin and Island and Peninsular Development and a 10 per cent state in Sime Darby Holdings, a leading multinational conglomerate with substantial plantation and other interests in Malaysia. Pernas in turn would receive almost 40 per cent of the enlarged capital of Haw Par. Further developments following the announcement added to the complication. The Singapore Securities Industries Council ruled that under its Code on Take-overs and Mergers, Pernas Securities had to make an offer for the rest of the shares of Haw Par not already owned by it. In turn the London City Panel which was responsible for its own Code on Take-overs and Mergers ruled that Haw Par had to make a bid for the 49 per cent minority shares in London Tin. On July 19 three directors of Haw Par resigned from the board. The Singapore authorities, subsequently, instituted legal proceedings against 2 of the ex-directors of Haw Par for 'serious wrongdoing' and 'misapplication of company funds.' An alternative scheme had to be worked out before the merger between Haw Par and Pernas Securities could be consummated.