From The Straits Times, by Leslie Lopez, September 9, 2011:

Sime Darby, Malaysia’s financially bruised plantation-based conglomerate is presenting the country’s securities watchdog agency with an awkward policy dilemma with its acquisition of a 30 per cent interest in public listed property concern Eastern & Oriental (E&O) for RM 766 million.

Central to the widening public debate is whether the state-controlled group should be compelled to make a mandatory general offer for the remainder of E&O shares, a deal which could cost an additional RM 2.6 billion.

E&O is a property concern with lucrative rights to carry out large reclamation works in the northern

island of

Penang.

Critics of the deal argue that Sime Darby’s purchase of the block from three groups, including

Singapore’s GK Goh Holdings, was structured in a way to circumvent the country’s takeover code.

But proponents of the transaction insist that Sime Darby was merely opting for a more cautious approach to its investment in E&O, and that a general offer could being the offing in the coming months.

In any case, the deal is presenting the Securities Commission Malaysia (SC) with a prickly regulatory problem over whether it should force Sime4 Darby to make an immediate general offer in the interest of protecting the rights of minority shareholders

On a separate level, the brewing Sime Darby-E&O controversy has also put SC chairman, Tan Sri Zarinah Anwar, in a tight spot. That is because her husband, Dato Azizan Andul Rahman, who is also the E&O chairman, had raised his personal stake in the company just weeks before Sime Darby announced its proposed acquisition in E&O.

Ms Zarinah did not respond personally to queries posed by The Straits Times.

But an SC spokesman said in a written response that the agency was “examining the circumstances surrounding the Sime Darby-E&O transactions for any Takeover Code implications, and will determine the action based on our findings”.

The spokesman added that the agency was “examining all transactions in the Sime Darby-E&O deal”.

……..

In recent days, Sime Darby executives have dismissed suggestions that the company was acting in concert with the sellers of the E&O shares, a situation that would definitely trigger a general offer.

But critics of the deal are not convinced. They note that Sime Darby, which is still recovering from heavy losses sustained from its foray into the oil and gas sector, would be negligent to its own minority shareholders for entering into a huge amount of capital without having some form of control.

How the SC decided will be crucial. There is already speculation that other shareholders of E&O are considering legal action to force a general offer.”