Content area
Full Text
As telco heavyweight Maxis Communications bids farewell to Bursa Malaysia by way of its impending delisting to seek greater exposure overseas, market watchers lament the demise of yet another quality stock on the local bourse.
THE voluntary general offer (VGO) by majority shareholder T Ananda Krishnan to buy out the minority shareholders of Maxis Communications Bhd and take it private must have come as a big surprise to the market. While some had earlier speculated about a potential takeover exercise for the company, most analysts did not expect it to happen, not when the stock was well regarded and attracted a sizeable following on the local market.
Certainly, Maxis was not a company that was seen as undervalued by the market, and at its pre-suspension price (prior to the announcement of the VGO) of RM13.00, the stock was being traded at around the fair value of RM13.00-RM14.00 set by most analysts.
As such, the conventional assumption that the company was being taken private by Ananda because it was not being fairly valued by the market is non-existent in this case. The real answer is nobler, ie, to protect minority shareholders from expected volatilities in its share price in the future. Apparently, as Maxis embarks on a regional expansion plan, it is likely to involve a lot of cash outflow and capital expenditure (capex), and possibly, lower earnings in the short term.
Going, going, gone
To recap, Binariang GSM Sdn Bhd, a private vehicle controlled by Ananda, has made a VGO to acquire the entire share capital of Maxis, amounting to 2.53 billion shares for RM39.9 billion or RM15.60/ share in cash. The VGO price was at a 20% premium to the pre- suspension price of the stock of RM13.00 and the valued Maxis equity at RM39.9 billion (US$11.4 billion) based on a RM/US$ exchange rate of RM3.50/US$1. Maxis' share price, as expected, rose swiftly post- suspension and was trading at RM15.30 at the time of writing, close to the VGO price (see chart).
Binariang has stated that its objective is to acquire a 100% equity interest in Maxis and delist the stock from Bursa Malaysia. Three scenarios could materialise as pointed out by Binariang itself, which are:
* It acquires 100% of Maxis and...