Business

Thursday November 12, 2009

Surprise for NSTP shareholders

By ANITA GABRIEL


PETALING JAYA: Minority shareholders of The New Straits Times Press (M) Bhd (NSTP) who are disgruntled over Media Prima Bhd’s takeover offer may soon have more than one reason to cheer.

Sources said Media Prima would likely revise upwards its offer price for 43%-owned NSTP while the latter is expected to announce a special dividend.

Trading in both counters has been suspended pending an “announcement on the revision of the terms and conditions” of the proposed takeover offer of NSTP by Media Prima. The announcement is expected today.

It is learnt that the NSTP board had deliberated on Media Prima’s offer, which was first announced on Oct 16, and both parties had agreed to revise the terms.

According to sources, the revised offer was tabled to the NSTP board late yesterday and involves “a change in the valuation of NSTP’s business, given the uptick in investment and synergies that the enlarged entity would be able to reap.”

The price revision will be reflected in the share swap ratio which will no longer be one-for-one.

More interestingly, it is learnt that the NSTP board has decided to distribute some “excess capital” to shareholders as a special dividend, indeed a pleasant surprise.

Said a source: “Post-takeover, considering the entity will be much larger and able to source funding requirements quite easily, it is deemed that NSTP would not need to conserve its cash to the same extent.

“So, the board has decided to return its excess capital to shareholders.”

Analysts generally view the deal as value accretive on the premise that it will transform the enlarged company into an integrated media group with full control on TV, newspaper, radio, new media and outdoor platforms, while reaping significant cost savings.

Based on the original deal, Media Prima’s proposed conditional takeover offer involves a share swap of one new Media Prima share for every one NSTP share at an issue price of RM2 per share. It is also offering one free warrant for every five NSTP shares.

The exercise effectively valued NSTP at RM2.10 per share, which some viewed as disappointing against its pre-announcement stock price of RM2.46; at 0.46 times price-to-book (NSTP’s net tangible asset as at end-September stood at RM4.60 per share), critics had also pointed out that the deal undervalued NSTP.

In a statement yesterday, Minority Shareholder Watchdog Group CEO Rita Benoy Bushon pointed out that of NSTP’s total net assets of RM998.19mil, its printing plant and machinery alone took up about 42%.

Excluding these, NSTP’s net tangible asset per share is RM2.70, hence the offer price stands at a 22% discount to this value.

From a price-earnings (PE) perspective, she said the offer price represented a 15% discount to the regional newspaper publishing company’s PE of 13 times, which fair-valued NSTP at RM2.47 per share.

“Probably, Media Prima could revise the offer upward to gain full acceptance,” she said, adding that both NSTP and Media Prima shareholders, particularly the non-interested minority shareholders, should evaluate the offer and consider carefully the recommendations (to be issued) of the independent adviser.

However, that may soon be a moot point considering that the deal, just under a month since it was proposed, is right now being sweetened up.


NSTP : [Stock Watch] [News]

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