TECHNOLOGY and automotive group WBL Corporation Ltd's Nasdaq-listed subsidiary Multi-Fineline Electronix (M-Flex) is proposing a voluntary conditional offer worth about US$500 million (S$809.2 million) for another of WBL's unit MFS Technology Ltd.

If M-Flex succeeds in acquiring Sesdaq-listed MFS, the combined entity will become the world's second largest flexible printed circuits (FPC) manufacturer in terms of revenue.

M-Flex provides FPC and component assembly solutions while MFS designs, makes and distributes FPC and FPC boards.

Under M-Flex's proposed cash or share offer, MFS shareholders can choose to receive, in exchange for each MFS share, either 0.0145 new share of M-Flex common stock or cash in the amount of:

• $1.15 if M-Flex receives valid acceptances of below 90 per cent of MFS shares (excluding those shares already held by M-Flex, its related companies and their nominees at the date of the voluntary conditional offer).
• $1.20 if M-Flex receives valid acceptances of at least 90 per cent of MFS shares (excluding those shares already held by M-Flex, its related companies and their nominees at the date of the voluntary conditional offer).

Based on M-Flex's closing share price of US$63.82 on the Nasdaq on Wednesday and an exchange rate of US$1 for S$1.6227, the stock consideration of 0.0145 new share of M-Flex common stock values each MFS share at about $1.50.

This represents a 30.4 per cent premium over the last transacted price of MFS shares which closed at $1.15 on Wednesday - the latest trading date prior to the proposed offer's announcement.

Based on the total issued share capital of 654,655,497 MFS shares, M-Flex's proposed offer is worth as much as $982 million assuming all MFS shareholders elect to take the stock consideration.

The exact value of the deal will depend upon the extent of participation and the number of MFS shareholders electing the cash or stock consideration but M-Flex said in an announcement that the deal is expected to be worth about US$500 million.

WBL, which owns 55.7 per cent of MFS, said it has already given an irrevocable undertaking to tender its entire stake in MFS for new shares of M-Flex common stock.

MFS directors Pang Tak Lim and Lester Wong, holding 1.2 and 0.1 per cent of MFS respectively, have also given a similar undertaking.

M-Flex said that it expects to pay a cash consideration of up to US$222 million assuming all MFS shareholders accept the offer and if only WBL elects to receive shares of M-Flex common stock.

WBL, through its subsidiaries Wearnes Technology and United Wearnes Technology, currently holds an effective interest of about 55.8 per cent in M-Flex.

Following the completion of M-Flex's proposed acquisition of MFS, WBL's effective interest in the enlarged outstanding capital M-Flex common stock will be about 63.7 per cent assuming only WBL elects to receive the stock consideration.

But if all MFS shareholders elect to receive as consideration new shares of M-Flex common stock, WBL's effective interest in the enlarged outstanding capital of M-Flex common stock will be about 55.8 per cent.

M-Flex's proposed offer will depend upon the company receiving a minimum acceptance level of 64 per cent of MFS shares and the fulfilment of other conditions.

In a separate announcement, WBL's directors declared a special interim dividend of 10 cents per ordinary stock, less income tax to reward its shareholders in conjunction with the company's centennial anniversary this year.