UPDATE: Konnectivity: To proceed with offer to buy M1 shares

M1 location in Singapore Geylang neighbourhoodM1 location in Singapore’s Geylang neighbourhood

Konnectivity will proceed with its offer to acquire all outstanding shares of Singapore telco M1 at S$2.06 each after the pre-condition of regulatory approvals was met, it said in a filing to SGX on Friday.

In September, M1 shareholders Keppel Corp. and Singapore Press Holdings (SPH) set up Konnectivity as a special purpose vehicle for the acquisition. Keppel Konnect, a wholly owned subsidiary of Keppel, will hold 80 percent of Konnectivity, while SPH will hold the remaining 20 percent, filings to SGX in September said.

The offer is for all M1 shares it doesn’t already own or control and is conditional on Konnectivity receiving, by the offer’s close, valid acceptances that will result in it obtaining control of more than 50 percent of M1’s shares, the filing to SGX after the market close on Friday said.

Konnectivity intends to gain majority control of M1 and if it obtains acceptances of more than 90 percent of M1’s shares, it will delist the telco, it said.

Konnectivity has a deemed interest of around 33.32 percent of M1, 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.

SPH said in September it would roll its M1 stake into Konnectivity and invest up to around S$51.3 million in cash to partially fund the offer, with its effective stake in M1 potentially set to rise to 16.13 percent after the close of the offer.

In September, Malaysia-listed Axiata, which holds around 28.7 percent of M1, indicated it was still reviewing the offer, while a Reuters report at the time, citing a source with direct knowledge of the matter, said the bid was likely to be rejected. Axiata did not immediately respond to Shenton Wire’s emailed request for comment on Friday, which was sent outside of office hours.

At the time the offer was initially announced, it was pre-conditional on receiving all authorizations from the Info-communications Media Development Authority, or IMDA.

On Friday, Konnectivity referred back to the reasons for taking full control of M1.

“The company is facing intensifying competition and industry disruption from the impending launch of a fourth Mobile Network Operator (MNO), as well as the launch of new Mobile Virtual Network Operators (MVNO) in Singapore. Continuing the status quo risks stagnation and further decline in shareholder value,” the filing on Friday said.

The offer is aimed at arresting that decline via “transformational efforts” which are expected to take several years, and which could affect dividends, it said.

The offer price was a 26 percent premium over the last traded price for M1 shares on 21 September, before the offer was announced, it noted. Shares of M1 closed Friday at S$2.10 each.

This article was originally published on Friday, 28 December 2018 at 20:25 SGT; it has since been updated. 

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