The move from Indonesian food giant Indofood Sukses Makmur serves as a stunning vote of confidence in the company and undermines the short-selling claims.

Indofood, which is controlled by Indonesian billionaire Anthoni Salim, offered to pay S$1.12 (US$0.88) for each China Minzhong share. This translates to S$488 million for the 66.5 per cent of the firm that it does not already own.

Indofood bought 3.9 per cent of China Minzhong in so-called married trades on Monday, taking its stake to 33.49 per cent.

As that stake exceeded 30 per cent, Indofood had to make a general offer for China Minzhong under Singapore's takeover code.

China Minzhong chief executive Lin Guo Rong and the chief financial officer Ryan Siek Wei Ting are among top executives who have said they will reject the surprise offer.

Lin said that top managers have not sold their core shares since the listing and they have no intention to sell any shares.

"We have confidence in our business," he told a briefing.

Indofood had been keeping its cards close to its chest. Siek said on Monday that the firm was told only early Monday morning that Indofood was thinking of launching a general offer.

The confirmed offer was announced hours later, about 2:30pm. The move spelled more drama for China Minzhong investors.

The firm's shares had been on a trading halt for almost a week after the short-selling allegations and were supposed to resume trading Monday morning.

But the arrival of the offer meant the trading halt was extended until after the official announcement in the afternoon.

The Indofood move supported China Minzhong's stock price and gave a black eye to United States short-seller Glaucus Research Group, which had been attacking the firm.

Glaucus claimed last Monday that China Minzhong fabricated sales and other figures and doctored its capital expenditures.

The incendiary Glaucus report sent the shares plunging as much as 51 per cent before a trading halt stemmed the bloodshed.

China Minzhong issued a detailed rebuttal to Glaucus on Sunday evening.

But the Indofood offer probably boosted China Minzhong's share price on Monday, more than the firm's own declarations of innocence.

After trading resumed Monday afternoon, the stock soared S$0.60 cents to close at S$1.125, slightly higher than the S$1.12 offer price and a one-day rise of about 112 per cent from its battered-down price last Monday.

Indofood's offer is higher than China Minzhong's average traded price over the past one month, three months and six months. It is also higher than the last closing price of S$1.015 before the Glaucus report.

Indofood started investing in China Minzhong, a China-based vegetable seller, in February, subscribing to a placement of new stock and buying shares from GIC, formerly the government of Singapore Investment Corp.

Its general offer will likely damage Glaucus, which in its report last Monday admitted to having a "short" position in China Minzhong.

The shares were in free-fall for only 90 minutes last Monday after the report landed, before trading was halted around 11am.

That halt stayed in place until Monday afternoon.

As soon as it was lifted, news of the offer drove up the price, meaning there was only a very small window last Monday for Glaucus to cover its "short" position.

Market watchers said the short-seller was unlikely able to fully cover it, meaning its gains from the bet would be much reduced or it might even have ended in the red.

Glaucus put up a brave front Monday, issuing another report to shoot back at China Minzhong's Sunday response.

Observers also said that Indofood was probably using the offer to protect its own existing investment in China Minzhong.

The offer values China Minzhong at S$734 million. Indofood, which is worth around 51.8 trillion rupiah (S$6.2 billion) would pay S$488 million for all outstanding shares.

*US$1 = S$1.27

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia