In a move that has caught the market by surprise, Petroliam Nasional Bhd
(Petronas) is offering 5.30 ringgit (US$1.7) per share to buy out minority
shareholdings in MISC Bhd, with the intention of taking the latter private.
The buyout, if successful, will
remove the close to 20 billion ringgit ($6.4 billion) company in market
capitalisation from Bursa Malaysia, making it one of the largest privatisation
deals in recent times.
Petronas, which owns 62.67 per
cent or 2.797 billion shares of MISC, would be forking out around 8.83 billion
ringgit ($2.8 billion) to buy back the shares it does not own.
The 5.30 ringgit offer price
works out to a premium of 18.04 per cent or 81 sen above MISC's closing price
of 4.49 ringgit on Wednesday.
In the takeover notice issued to
MISC, Petronas said it did not plan to maintain MISC's listing status.
Petronas said the offer was
conditional on having received valid acceptances, which would result in
Petronas holding 90 per cent or more of the total MISC shares.
MISC's other substantial
shareholders are the Employees Provident Fund at 9.66 per cent and Skim Amanah
Saham Bumiputra at 6.35 per cent.
The takeover notice did not state
the rationale for the privatisation of MISC. However, in a statement issued by
Petronas, it said that MISC was an important part of its integrated business
and that the prevailing industry backdrop and uncertain global economy had made
efforts to sustain and transform the business of MISC challenging.
“The offer represents a
significant step by Petronas to take MISC private and obtain full control of
it.”
The national oil corporation said
this would provide it with greater flexibility in deciding MISC's strategic
direction. MISC is one of the largest shipping companies in the world and also
operates shipping-related services.
Petronas said that it had no
plans to dismiss or make redundant the employees of MISC after the
privatisation. It also said that it had “no intention of making a separate
takeover offer for MISC's listed subsidiary Malaysia Marine and Heavy
Engineering Holdings Bhd (MMHE). MISC owns 66.5 per cent of MMHE.
However, the proposed buyout has
surprised many analysts, as it came at a time when the shipping giant was
turning around after several quarters of losses. It was also coming close on
the recent C$5.2 billion takeover of Canadian-listed Progress Energy Resources
Corp by Petronas.
Zulkifli Hamzah, head of research
at MIDF Amanah Investment Bank, said: “We are caught by surprise by the
privatisation of MISC, especially as it had gone through a kitchen-sinking
exercise in late 2011 or early 2012 and would have, therefore, been in a much
better financial shape.”
He added that while the petroleum
tanker division was still suffering from high supply in the sector, recovery
should be due in the near future.
“Nevertheless, the decision to
delist MISC reflects the stance of the controlling shareholder that the market
is not doing justice to the valuation of the company. Taking the company
private could be a precursor to more corporate actions involving MISC.”
MISC's share price has remained
lacklustre in recent years. It had hit a high of 9.94 ringgit on Dec 6, 2007
and a nine-year low of 3.87 ringgit on June 5 last year. Yesterday, the stock
closed at 4.45 ringgit before trading was suspended.
Another analyst said: “I think
Petronas just feels that MISC's valuation is at a rock bottom, and it can add a
lot more value by restructuring the business away from the public eye.”
He, however, thought that the
offer price could be higher.
“Our sum-of-parts calculation for
MISC is 6.20 ringgit, so 5.30 ringgit is not fair'.”
MISC's bottomline has been
volatile in the recent past due to the challenging shipping business. But it
was turning the corner following the sale of its liner business in December
2011.
*US$21= 3.1 ringgit
Gurmeet Kaur and Liz Lee
The Star
Business & Investment Opportunities
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