KUALA LUMPUR (Sept 27): The pre-condition offer of S$2.06 per share from Keppel Corp Ltd and Singapore Press Holdings Ltd (SPH) to buyout all shares they do not own in Singapore-listed M1 Ltd, of which Axiata Group Bhd owns a 28.69% stake, hinges on approvals obtained from the Info-communications Media Development Authority (IMDA) in Singapore, according to an announcement by M1 Ltd to the Singapore Exchange (SGX) this morning.
“All authorisations, clearances, licences, orders, confirmations, consents, exemptions, grants, permissions, registrations, recognitions, clearances and other approvals from the Info-communications Media Development Authority (“IMDA”) necessary or appropriate for or in connection with the offer; or the acquisition of control of any of the company (M1 Ltd) or its subsidiaries arising from or in connection with the offer,” the announcement said.
Earlier today, theedgemarkets.com reported Axiata has received the pre-conditional offer of S$2.06 per share.
The filing noted the offer will not be made in the event the pre-condition is not satisfied on or before 5.00pm on March 27, 2019, or other later date as Konnectivity Pte Ltd (the offeror) may determine in consultation with the Securities Industry Council of Singapore (SIC).
The offer is also conditional on the offeror obtaining more than 50% stake in M1.
AmInvestment Bank’s analyst Alex Goh has issued a report saying the voluntary conditional general offer made by a special purpose vehicle (SPV), Konnectivity, held by Keppel Corp and SPH, for the remaining shares not held by them at S$2.06 per share, a 26% premium above its last traded price, is likely to be accepted by Axiata, as the associate stake in M1 is not considered a strategic asset for Axiata, amid a highly competitive cellular market which needs sustained capital expenditure (capex) rollouts.
Goh remains neutral on the development of the sale. While he expects a slight earnings per share (EPS) reduction for FY19 of 2% from the equity sale for Axiata as the loss in earnings contributions will be greater than interest savings, Goh noted the sale proceed of RM1.7 billion will improve Axiata’s gearing levels, with expected net debt-to-earnings before interest, tax, depreciation and amortisation (EBITDA) for FY19 to decrease from 1.6 times to 1.4 times.
He noted that the rationale for the offer, subject to the SPV securing an equity stake of over 50%, is to facilitate majority control in M1 to support business transformation initiatives, including digitalisation of the company’s operating platform, cost management drives and balance sheet optimisation.
“This is to enable M1 to meet the intense competition caused by the entry of the fourth telco operator TPG Telecom and more mobile virtual network operators (MVNO), which have pressurized the sector’s market share, revenue and margin trajectory, amid requirements of substantive reinvestments to improve network connectivity even further,” Goh said.