The mandatory offer to purchase the remaining shares of On’ally Holdings PLC by its new controlling shareholder, Lanka Realty Investments PLC, had drawn lackluster interest with the second largest shareholder of the company, Urban Development Authority (UDA), rejecting the offer set at Rs.30.32 per share, which is below current market prices. 

In a market announcement, Lanka Realty Investments revealed that it was only able to increase its stake by 0.207 percent in On’ally Holdings PLC, which owns and operates the Unity Plaza building in Bambalapitiya.

Lanka Realty Investments on December 11, 2020 announced an offer to purchase 45.7 ordinary shares constituting to 49.32 percent of On’ally Holdings for Rs.30.32 per share. Although the offer was set to expire late last month, it was extended up to 3rd of this month.

With the mandatory offer expiring last Wednesday, Lanka Realty Investments and parties acting on behalf of the company purchased 192,422 ordinary shares of On’ally Holdings upping its stake to 50.18 percent.

However, the UDA, which is the second largest shareholder of the company, owning 41.6 million shares of On’ally Holdings, constituting to 44.8 percent stake, has rejected the offer.

Similarly, a few years ago, when Renuka Capital made a play to acquire the control of On’ally Holdings by triggering a mandatory offer, UDA decided to hold on to its shares.

Before the market downturn last week, On’ally share remained at around Rs.40. Nevertheless, it was closed at Rs. 36 on Friday. The company’s net asset value per share as at September 30, 2020 was Rs.23.47.

Although, the Independent Investment Advisor Merchant Bank of Sri Lanka PLC (MBSL), appointed by the offeree, justified the offer price largely based on historical low liquidity of On’ally shares, the majority of the company’s Director Board disagreed with the investment advice of MBSL.

They pointed out that the offer price didn’t reflect the correct price in particular considering the potential for future developments of the company.

Lanka Realty Investments has announced plans to transform Unity Plaza as a top Grade-A office building, according to some media reports. 

Meanwhile, over the last week, On’ally Holdings PLC announced appointments of four new directors representing Lanka Realty Investments PLC with effect from February 1st. 

Accordingly, Archie Warman and Hisham Jamaldeen were appointed as Non-Independent Non-Executive Directors of the company while Sarravanan Neelakandan and Afzal Ahamed Marikar were appointed as Independent Non-Executive Directors.

Warman, who is a co-founder of the parent of Lanka Realty Investments PLC, was also appointed as the Deputy Chairman of On’ally Holdings, while K.J. Pradeep was appointed as the alternate Director to Warman.