KUALA LUMPUR: T. Ananda Krishnan is offering RM15.60 a share to buy out minority shareholders in Maxis Communications Bhd.
The cash offer for the remaining 41% stake he does not own is 20% higher than the last traded price of RM13 in Malaysia’s leading cellular company.
If all goes as planned, shareholders can expect to be paid by mid-year and Maxis should be de-listed from Bursa Malaysia before the year is out. However, a re-listing of Maxis on Bursa can be expected when the company “is substantially bigger and has a better earnings profile.”
At RM15.60 a share, the privatisation is valued at RM39.9bil, making it one of three biggest deals in Asia, ex-Japan, in recent times. As for Ananda, and although the funding is in place, he has to pay RM16.4bil to buy out the shareholders.
In a press briefing, CIMB Bhd president and chief executive Datuk Nazir Razak said the offer price was fair. Many research houses’ fair value of Maxis prior to its suspension was RM12 to RM13 a share.
Datuk Nazir Razak (second from left) speaking at the press conference on Binariang's VGO for Maxis shares. With him are ABN AMRO vice-chairman and head of global client Asia Richard Orders (left), Raja Datuk Arshad Raja Tun Uda (centre), and Binariang directors - Ralph Marshall (second from right) and Chan Chee Beng.
“Shareholders who have held shares in Maxis since its IPO in July 2002 would enjoy a total return of 301%, including dividends, which represents a 36% internal rate of return should they accept the offer,” Nazir said. Maxis has grown from merely a Malaysian play to a regional company that has operations in India and Indonesia and may continue to acquire stakes in one or two more regional telcos in the medium term.
To grow further, it needs huge funding and it is learnt that Maxis needs over RM12bil from now up to 2010.
The risks are also greater when operating in markets away from home and, given the huge cash outlay needed, a strain on its cash flow can be expected to limit its ability to pay dividends and affect its share price.
“The privatisation will eliminate the impact of earnings volatility on public shareholders,” said Raja Datuk Arshad Raja Tun Uda, chairman of Binariang GSM Sdn Bhd, the company created to undertake the privatisation exercise.
Taking Maxis private is seen as a viable option as it gives Ananda greater flexibility to chart the forward direction for Maxis and re-enter Bursa when it has “stable earnings” again.
Of the over RM12bil in capex requirement, RM10.5bil (US$3bil as told by Maxis group CEO Datuk Jamaludin Ibrahim to StarBiz recently) is needed for expansion of its Indian operations via Aircel Ltd till 2010, RM1.2bil for expansion of its Malaysian operations in the medium term and about US$500mil to re-start its operation in Indonesia via PT Natrindo Telepon Selular.
Ananda-controlled Usaha Tegas Sdn Bhd, which owns a 46% stake in Maxis, will have a 78% stake in Binariang.
The bumiputra trustee companies (now holding 13% stake in Maxis) will own the remaining 22% in Binariang.
Binariang is making the offer to take Maxis private and has secured funding for the exercise. CIMB Bhd and ABN AMRO Asia Advisers (M) Sdn Bhd are the joint advisors; the latter has thus far underwritten solely the bridging loan for the privatisation exercise with other banks emerging at a later stage.
Binariang will later issue bonds to repay the borrowings to buy out the shareholders of Maxis.
Raja Arshad also did not believe the de-listing of Maxis would erode the company’s strong brand value as it would be business as usual at the company with no “management changes” expected.
To a question whether private equity investors would emerge in Maxis after the de-listing, Raja Arshad said: “No.”
The takeover notice was issued to Maxis yesterday and offer documents will be despatched to shareholders by May 24 with the closing date targeted at June 14. All necessary approvals will also be sought for the exercise.
To a question whether sister company Astro All Asia Networks plc would be de-listed too, Raja Arshad said: “I can only speak for Binariang.”
Nazir said there was a growing trend for companies to go private these days and many more could be expected in Malaysia as the equities market matured and the bond market experienced good growth.
MAXIS : [Stock Watch] [News]
MAXIS-CA : [Stock Watch]
For latest Bursa Malaysia indices, charts and other information click here
RSS