Malaysia-listed Axiata, which holds around 28.7 percent of M1, said on Thursday that it was still reviewing the Keppel Corp.’s and Singapore Press Holdings’ bid for all of M1.
“The company has been clear in our position that the offer should reflect the accurate future value of M1 (inclusive of an acceptable control premium), consistent with market standards,” Axiata said in a filing to Bursa Malaysia on Thursday.
“Hence, the above shall be the primary bases for Axiata to review the offer together with other considerations, including but not limited to, comparable premium on precedent transactions within Asean market, M1’s historical trading trend whereby the price has been depressed for more than a year vis a vis its true value potential, long-term growth potential, and future competitive outlook,’ Axiata added.
Shares of M1 have trended lower for years, flirting with nearly S$4.00 a share in February 2015 before trading as high S$2.31 in May of 2017 and as high as S$1.90 in January.
Keppel Corp. and SPH, via a special purpose vehicle called Konnectivity, plan to make an offer for all of M1 at S$2.06 a share, it said in a filing to SGX on Thursday. The offer price is a premium of 26 percent to the last traded price of S$1.63 on Friday of last week.
Konnectivity has a deemed interest of 33.27 percent of M1, it noted, with Keppel Telecommunications & Transportation, which is 79 percent owned by Keppel, owning 19.2 percent, while SPH has a 13.45 percent stake held via wholly owned subsidiary SPH Multimedia.
Separately, Reuters reported, citing a source with direct knowledge of the matter, that Axiata was likely to reject the offer, with the source calling it “opportunistic” and “inadequate.” The source said Axiata was talking with private equity firms and other companies and was considering launching its own offer to increase its M1 stake, according to the Reuters report.
Axiata said it would review its options on its M1 shares with “the sole objective of vigorously protecting and enhancing shareholders’ value of both Axiata and M1, the latter via our board representation.”
A previous review of M1 holdings by Axiata, Keppel and SPH, which was concluded in July 2017, had failed to result in a deal over the company’s future.
In a note this week, Nomura said M1’s contribution to Axiata earnings was “steady and substantial,” at more than 100 million Malaysian ringgit a year, or 13 percent of the group earnings in 2017. But at the same time, Axiata has M1’s book value at around S$2 a share, it said, compared with the stock price at S$1.63 at Friday’s close.
With Axiata’s gearing levels “more manageable” than at the time of the review last year, it’s under less pressure to get a deal done, Nomura said.
Axiata halted its shares from 2:30 P.M. SGT to 3:30 P.M. SGT, starting from before it issued the statement.
Shares of Axiata were down 1.89 percent at 4.66 Malaysian ringgit at 3:34 P.M. SGT; that was off as high as 4.85 ringgit earlier in the session.
This article was originally published on Thursday 27 September 2018 at 15:56 SGT; it has since been updated to include the past movements of M1 shares.