After sharp initial falls yesterday, shares in Indonesian palm oil producer MP Evans Group PLC (LON:MPE) bounced back today as the company welcomed the rejection by shareholders of a hostile takeover bid which it believed "very substantially undervalued" the company.
MP Evans saw its value fall by a quarter in late trade yesterday after Kuala Lumpur Kepong Berhad (KLK) said its £415.4mln takeover bid for the AIM-listed firm had failed.
The Malaysian firm said it had only received valid acceptances for its offer in respect of around 13.2% of MP Evan's issued ordinary share capital by Wednesday's deadline, falling to reach the over 50% level required.
READ: MP Evans gets brokers’ backing …
Today MP Evans’ chairman Peter Hadsley-Chaplin said: “The board thanks our shareholders for their support and for their belief in the continuing successful execution of our growth strategy."
He added: “The successful growth to date has led to the board's recently stated intention to increase dividends substantially.”
KLK first launched its takeover bid for MP Evans at the end of October at a price of 640p a share, which the UK firm swiftly rejected as a significant undervaluation of the business, before the Malaysian firm came back with a revised offer of 740p a share in mid-November.
In its response document at the end of November, MP Evans said an independent valuer, Khong & Jaafar, had valued its equity at 1,082p per share, 46% higher than KLK's offer.
At the same time MP Evans announced a change in its dividend policy, which will see it make payouts in 2016 and 2017 of at least 71% more than in 2015.
In mid-morning trade, MP Evans shares were up over 13%, or 65p at 555p.
Analysts at VSA Capital said today: "We had speculated that the price would stay well above its pre-bid price of 430p and were hopeful it would stay above 500p. It closed slightly below this level yesterday (490p) and we would expect it to settle above this level in the coming days."
In a note to clients, they added: "The delayed removal of the bid premium might have surprised us slightly but one thing is certainly clear, MPE and the other two London-listed stocks REA Holdings (RE/ LN) and Anglo-Eastern Plantations (AEP LN) are currently significantly undervalued.
"We would expect all three to rise as CPO prices continue to strengthen in the coming months, as a result of low production, a short-term recovery in Indian demand, the long-lingering impact of the 2015 El Niño and potential harvesting and logistics issues resulting from the current heavy rainfall in some key areas of South East Asia."
-- Adds company comment, updated share price --