IT HAS been over a year since Nasdaq-listed Multi-Fineline Electronix Inc (M-Flex) decided to make a voluntary general offer for all the shares of mainboard-listed WBL Corp (Wearnes) subsidiary MFS Technology, which is also listed on the Singapore Exchange's first-tier board.

It should have been a straightforward deal but for the fact that the Anaheim, California-based M-Flex, which is another Wearnes subsidiary, had a change of mind and tried to rescind the offer on the grounds that MFS's financial performance since the initial bid could not justify the purchase.

M-Flex chief executive Phil Harding, in echoing the recommendations of a special committee's findings, said: 'In light of recent developments, the acquisition no longer makes financial sense under the existing price and terms.'

MFS had earlier reported that net profit for the three months ended June 30, 2006, had dropped 84 per cent to $1.04 million from the previous corresponding quarter. Group revenue had fallen 8 per cent to $71.9 million.

However, Singapore's securities industry's watchdog, the Securities Industry Council (SIC), despite several appeals, has refused to allow the company to withdraw the US$500 million offer which would have created the world's second-largest producer of flexible printed circuit boards in revenue terms.

The SIC also asked M-Flex to further extend the deadline for the fulfilment of certain pre-conditions regarding the offer. While 'strongly' recommending MFS shareholders to vote against the offer, M-Flex agreed to extend the offer by three months from March 31 to June 30.

Under the original terms of the offer, there are certain pre-conditions that could release M-Flex from its obligations to proceed, including the failure of the US Securities and Exchange Commission (SEC) to declare the registration statement regarding the offer effective by Dec 31 last year.

M-Flex said that it had filed an amendment to the registration statement with the SEC on March 19, although as at March 31, the statement had not yet been declared effective as the SEC has made further queries regarding the offer.

So yet again, though rarely, an offeror now lives in fear of his bid succeeding. Looking at the prevailing price of MFS shares, nearly every single MFS shareholder is likely to accept the bid. In fact, Wearnes, which has a 56 per cent stake in MFS and a deemed interest of 61 per cent in M-Flex, has accepted the offer.

The Singapore seller of Jaguar, Bentley and Renault cars has said that it would urge its shareholders to vote in favour of the offer at an extraordinary general meeting to be held probably at the end of next month. The EGM to get shareholder approval is another pre-condition of the offer.

MFS shares have fallen to as low as 65 cents since M-Flex's initial announcement to withdraw its offer, and although they have recovered somewhat since, at just under a dollar now, the price is way off M-Flex's offer of between $1.15 and $1.20 a share.

And with the dismissal of M-Flex's lawsuit in a US court seeking to direct Wearnes to vote against the takeover, on the basis that the deal would be 'breaching its fiduciary duties and obligations to M-Flex's minority stockholders', the odds on the deal going through are even greater.

However, Wearnes itself will be opting for M-Flex shares instead of cash, as it feels that although the business rationale to combine M-Flex and MFS remains, 'it is imperative from Wearnes's perspective that the merged entity is financially strong'.

M-Flex would have needed US$522 million to pay for the deal if every shareholder opted for cash. With Wearnes opting for shares, M-Flex need only raise US$236 million if the other shareholders ask for cash.

So the long unhappy saga is likely to find a happy resolution by the end of June.